MONTHLY FUND REVIEW
All data as at 30 September 2012 unless otherwise stated
Eastspring Investments
– Asian Property Securities Fund
FUND UPDATE
Investment objective
Eastspring Investments – Asian Property Securities Fund (the “Fund”) aims to maximize income and longterm total return by investing primarily in listed closed-ended Real Estate Investment Trusts and securities
of property-related companies, which are incorporated, listed in or have their area of primary activity in the
Asia Pacific Region. The Fund may also invest in depository receipts including American Depository
Receipts (ADRs) and Global Depository Receipts (GDRs), debt securities convertible into common shares,
preference shares and warrants.
COMMENTARY
Fund performance and market overview 2
The Fund returned 4.9% and outperformed the benchmark by 1.5% in September. Since inception, the
Fund has outperformed the benchmark by 1.7% p.a.
Australia’s REIT sector extended gains in September as yield-seeking investors provided support but
against the broader market, it underperformed slightly as investors’ attention shifted to the mining
sector, which gained some of its losses. The 16-member S&P/ASX 200 A-Reit index rose 1.31% in
September from August when it fell 1.27%. The A-REIT index underperformed the broader S&P/ASX 200
index which rose 1.64% during the month.
Japan’s REITS and property indices outperformed the broader Topix benchmark in September, triggered
partly by the Bank of Japan’s decision to further ease monetary policy. The Topix Real Estate Index
(TPREAL) advanced 7.89% in September from the previous month while the Topix Real Estate Investment
Trust (TSREIT) rose 4.93% in September. The market’s broader Topix index was up 0.79% during the
month.
In Singapore, property developers and real estate investment trusts extended gains for a fourth
consecutive month in September. The FTSE Straits Times Real Estate Investment Trust (FSTREI) rose
3.16% while the FTSE Straits Times Real Estate Index (FSTRE) gained 2.93%. The two indices were
ahead of the broader Straits Times Index (FSSTI) which was up 1.15% in September.
Hong Kong’s property and real estate investment trust indices advanced for a fourth consecutive month
in September from less concerns over policy headwinds and rising liquidity from QE3. The nine-member
Hang Seng Property Index surged 11.72% in September, its biggest month-on-month rise since January
2012 when it gained 12.62%. The index outperformed the Hang Seng REIT Index and the broader Hang
Seng Index which rose 2.78% and 6.97%, respectively, during the month.
1
Total return, USD (%)
FUND PERFORMANCE
45
1 month
3 months
1 year
3 year*
5 years*
Since Inception*
34.8 33.9
35
27.0
25
14.7
15
4.9 3.4
5
-5
8.1
10.1
12.9
15.1
12.6
0.2
-0.4
-3.6
-2.5
-4.0
-0.9
-1.5
-15
Fund (Offer-to-bid)
Fund (Bid-to-bid)
MSCI AC Asia Pacific REIT Index
Source: Eastspring Investments (Singapore) Limited and RIMES. Class A share class; USD; net income
reinvested; Offer-bid includes 5.0% Initial Sales Charge w.e.f. 01 Aug 12 and 5.75% Initial Sales Charge
prior to 01 Aug 12. Inception Date: 28 Feb 07 *Annualised. Benchmark: MSCI AC Asia Pacific REIT Index.
Past performance is not necessarily indicative of the future or likely performance of the Fund.
Key contributors to performance
Hong Kong developers generally did well in September as higher land supply and visibility is encouraging
higher asset turnover which is expected to drive return improvements. The Fund owns Sino Land and
Cheung Kong (Holdings) which were key contributors. Cache Logistics Trust was also a key contributor
during the month. The fund manager likes the resilience of its warehousing assets, especially given the
favourable supply situation in Singapore.
Key detractors from performance
Lend Lease Group fell after profit-booking irregularities were discovered in its Abigroup subsidiary. But
financial impact is nominal. The fund manager feels that the outcome is not uncommon for a merger &
acquisition (Abigroup was acquired in 2011), and the company is working towards improvement of internal
processes to align key deliverables and culture. Not owning The Link REIT and the underweight position in
Stockland both detracted value during the month. Investors continue to like Link for its low volatility in
earnings but valuations are now unattractive. Stockland has performed with expectations of lower interest
rates in Australia helping residential sales.
Changes to the portfolio
Among the larger transactions during the month, the fund manager trimmed less attractively valued names
such as Wharf (Holdings), Mapletree Commercial Trust and Hysan Development to initiate new positions in
Fraser Commercial Trust, a Singapore-listed entity that owns office buildings in Singapore, Australia and
Japan; Longfor Properties, a leading developer in Chongqing with developments in Beijing, Chengdu, Xian
and Shanghai; IGB REIT, owner of retail malls in Malaysia; and Ascendas India Trust, a Singapore-listed
entity that owns and develops business space in India, which were viewed as offering better value.
Strategy and outlook
The fund manager continues to keep a strong eye on relative valuations which have tended to outperform in
the medium term. The fund manager remains convinced that the underlying residential prices in Hong Kong
will continue to be robust, and developer balance sheets are strong enough to take advantage of
landbanking and healthy asset turns. This is despite the negative noise around policies – which has had
limited fundamental impact. As a result, the Fund remains weighted in Hong Kong. For Singapore, the Fund
continues to stay invested in resilient high dividend names but is underweight residential property due to the
downside risks in residential prices. Regionally, the Fund will continue to recycle out of defensive more
expensive REIT names regionally to selective residential and landlord plays. The fund manager may build
up more positions in ASEAN property names where economic growth is more supportive, consumer debt is
lower and provides more opportunity for sustained long-term growth.
TOP TEN HOLDINGS
%
COUNTRY* ALLOCATION
%
NIPPON BUILDING FUND REIT
6.2
SINGAPORE
27.7
LEND LEASE GROUP
6.0
AUSTRALIA
26.9
GOODMAN GROUP CLOSED FUND
5.8
JAPAN
18.0
CHEUNG KONG (HOLDINGS)
5.6
HONGKONG
13.6
MIRVAC GROUP UNITS
5.0
PHILIPPINES
4.2
JAPAN REIT
4.9
INDONESIA
2.4
WESTFIELD GRP REIT
4.8
THAILAND
2.0
FILINVEST LAND
4.2
CHINA
1.7
SINO LAND
4.2
MALAYSIA
1.7
CAPITARETAIL CHINA REIT
3.5
OTHERS
1.8
* Country classification by MSCI
Notes:
1. Lipper Leaders fund ratings do not constitute and are not intended to constitute investment advice or an offer to sell or
the solicitation of an offer to buy any security of any entity in any jurisdiction. As a result, you should not make an
investment decision on the basis of this information. Rather, you should use the Lipper ratings for informational
purposes only. Certain information provided by Lipper may relate to securities that may not be offered sold or delivered
within the United States (or any State thereof) or to, or for the account or benefit of, United States persons. Lipper is
not responsible for the accuracy, reliability or completeness of the information that you obtain from Lipper. In addition,
Lipper will not be liable for any loss or damage resulting from information obtained from Lipper or any of its affiliates. ©
Thomson Reuters 2011. All rights reserved. Data as at 28 September 2012.
2. Market data from Bloomberg, 30 September 2012
CONTACT DETAILS
Eastspring Investments (Singapore) Limited (UEN: 199407631H)
10 Marina Boulevard, #32-01 Marina Bay Financial Centre Tower 2, Singapore 018983
Tel: 6349 9711 Fax: 6509 5382
www.eastspringinvestments.com.sg
Important Information
This document is solely for information and may not be published, circulated, reproduced or distributed in whole or part
to any other person without the prior written consent of Eastspring Investments (Singapore) Limited (“the Manager”)
(UEN: 199407631H). This document is not an offer or solicitation of an offer for the purpose of investment units in the
Fund and nothing herein should be construed as a recommendation to transact in any investment product. Please note
that the securities mentioned are included for illustration purposes only. It should not be considered a recommendation to
purchase or sell any particular security. The securities discussed do not represent the fund's entire portfolio and in the
aggregate may represent only a small percentage of the Fund's portfolio holdings.
The fund(s) mentioned in this document is(are) sub-fund(s) of Eastspring Investments (“the SICAV”), an open-ended
investment company with variable capital (société d’investissement à capital variable) registered in the Grand Duchy of
Luxembourg on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 17
December 2010 relating to undertakings for collective investment (the "2010 Law") and the Directive 2009/65/EC of the
European Parliament and of the Council of 13 July 2009 (the "UCITS Directive").
Investors should be aware that investment in property is a long-term undertaking and there are specific risks associated
with investment in real estate investment trusts and property related securities of companies. These include the cyclical
nature of the real estate market, exposure to domestic and global macroeconomic cycles, increases in interest rates,
fluctuations in security prices owing to stock market movements and changes in investor sentiment, increases in property
taxes and operating expenses, depreciation in the value of buildings over time, variations in property prices and rental
income, changes in district values, changes in government policies with regards to real estate, regulatory limits on rents,
changes in zoning laws, environmental risks, related party risks, losses generating from casualty and natural
catastrophes (e.g. earthquakes), and changes in other real estate capital market factors.
Investors should note that the net asset value of this Fund is likely to have a high volatility due to its investment
policies or portfolio management techniques. The Fund may use derivative instruments for efficient portfolio
management or hedging purposes.
A prospectus in relation to the Fund is available and a copy of the prospectus may be obtained from the Manager and its
distribution partners. Investors should read the prospectus before deciding whether to subscribe for or purchase units in
the Fund. All application for units in the Fund must be made on the manner described in the prospectus. The value of
units in the Fund and the income accruing to the units, if any, may fall or rise. Past performance of the Fund/manager is
not necessarily indicative of the future performance of the Fund. The prediction, projection or forecast on the economy,
securities markets or the economic trends of the markets targeted by the Fund are not necessarily indicative of the future
or likely performance of the Fund. An investment in the Fund is subject to investment risks, including the possible loss of
the principal amount invested. Investors may wish to seek advice from a financial adviser before making a commitment
to invest in units of the Fund Whilst the Manager has taken all reasonable care to ensure that the information contained
in this document is not untrue or misleading at the time of publication, the Manager cannot guarantee its accuracy or
completeness. Any opinion or estimate contained in this document is subject to change without notice. The Manager is
an ultimately wholly-owned subsidiary of Prudential plc of the United Kingdom. Eastspring Investments (Singapore)
Limited and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal
place of business is in the United States of America.