Fund in Focus: AMP Wholesale Australian Property Fundby Chris Limberg on Sep 30, 2016
The AMP Wholesale Property fund will be added to the investment models in the near future. The reason for adding this investment is to gain exposure to property. Property traditionally has a low correlation to equities providing diversification with sustainable income from tenants rent and capital growth from quarterly property revaluations.
Fund objective: The WS Australian Property Fund was established in 1985 and aims to provide investors with income and long-term capital growth.
Fund strategy: Using low debt, invest in a diversified portfolio of quality Australian office, retail and industrial buildings. At the same time, hold a portfolio of cash and listed A-REITs for liquidity.
The reasons for investing in the AMP WS Property fund:
The fund Invests in 17 quality properties in major metropolitan markets throughout Australia. The fund has diversified investments across NSW, QLD, VIC and ACT in all sectors of the property – retail, office, industrial and cash and listed A-REIT exposure for liquidity.
AMP has significant experience and resources in investment management and real estate. The property investment team are able to draw on the wide range of investment specialist within AMP to ensure the quality of their investments.
- Low gearing
The fund currently has no debt within the portfolio but the ability to draw up to 25% of the gross assets within the portfolio. Having a no debt is one of the reasons for the selection of this fund. The experience of the GFC was that funds with high gearing (borrowing) levels had liquidity and valuation events which caused the funds to freeze distributions and redemptions to stop out flows. AMP have considered this and to maintain liquidity have no debt, cash and a small holding of listed A-REITs which can be liquidated within a short time.
- Attractive returns