Investment strategy

SG Hiscock’s investment approach is based on a disciplined valuation methodology with regard for the fundamental outlook. We use quantitative value inputs (ranked in our proprietary value model) combined with judgemental analysis of fundamental factors and market sentiment. In essence, this means the portfolios will generally show value characteristics but because of the fundamental overlays, these will rarely be extreme.

As a rule, AREITs derive the bulk of their income from rental property income. The fund generally seeks to invest in AREITs that exhibit an above-average proportion of their income sourced from rents rather than more volatile income streams such as third-party construction or development. As a result of this strategy, the fund’s investment portfolio has very different weights to that of the S&P/ASX300 AREIT Index.

Key beliefs that underpin our investment approach include:

• Prices move towards fair value over time
• A ‘property-like view’ is essential for correct valuation
• A low turnover approach is consistent with direct property
• A bottom-up approach captures valuation inefficiencies
• On-the-ground research is critical in gaining true insights
• REITs with superior fundamentals tend to outperform