InvestSMART Diversified Property & Infrastructure Portfolio - September 2018
• The InvestSMART Diversified Property & Infrastructure portfolio produced a return of -0.48% (after fees) during the September Quarter.
• There were no changes to the portfolio over the quarter
• Estimated yield on the portfolio is currently 5.16%
• Since inception the Diversified Property & Infrastructure portfolio has returned 4.66% per. annum (after fees)
With most Australian infrastructure assets seen as ‘bond proxies’ the selloff in Transurban, Sydney Airports and AGL Energy follows the selloff seen in the bond market as global interest rates rose through the three months to September. There were some specific headwinds announced in the August full year earnings season. But in the main, infrastructure assets suffered from being bond proxies.
Property fared slightly better, as rental yields grew year-on-year ETFs with retail exposures, like the Vanguard Australian Property Securities ETF (VAP), which is heavily weighted to Scentre Group and Goodman Group, added 0.63% in Q3. Internationally, property fluctuated but the SDPR Dow Jones Global Real Estate Fund posted a small gain, largely from currency.
We note that global bond markets have start the final quarter under enormous pressure due to the prospect of further increases to the Federal Funds rate. This will filter into to bond proxies and it is likely that infrastructure assets will underperform again in the final quarter of the year.