MONTHLY FUND REVIEW
All data as at 31 October 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
Market overview2
Australia’s REITs extended gains in October as investors continued to seek for yield and the sector's yield
spread to government bonds proved attractive. The Reserve Bank of Australia eased the cash rate by 25
basis points to 3.25% in October, ending a three-month pause, citing in part the slowdown in global
economic growth. The 16-member S&P/ASX 200 A-Reith index rose 5.19% in October, its second
consecutive month-on-month gain. It outperformed the broader S&P/ASX 200 index, which rose
2.96% during the month. All stock constituents of the A-REIT index ended October in positive territory.
Expectations of additional monetary easing by the Bank of Japan and healthy first-half earnings prompted
Japan’s REITS and property indices to outperform the broader Topix benchmark in October.
The Bank of Japan's policy board voted unanimously for further easing in the form of an 11 trillion yen
addition to the Asset Purchase Program and the creation of new funding to stimulate bank lending. It was
the first time since April-May 2003 that the Bank of Japan has eased for two months in succession.
The Topix Real Estate Index (TPREAL) advanced 5.54% in October from September's
7.89% while the Topix Real Estate Investment Trust (TSREIT) rose 3.07% in October, its third months
of gains The market’s broader Topix index was up 0.67% during the month.
In Singapore, property developers and real estate investment trusts extended gains for a
fifth consecutive month in October despite another round of property curbs. The FTSE Straits
Times Real Estate Investment Trust (FSTREI) rose 2.23% in October while the FTSE Straits Times Real
Estate Index (FSTRE) gained 2.17%, rising for the fifth month in a row. The two indices were ahead of
the broader Straits Times Index (FSSTI) which was down 0.72%.
Hong Kong’s property stocks underperformed the broader market in October due to the announcement of
property tightening measures by the government. Property developers lagged REITS during the month. The
Hang Seng REIT rose for a fifth consecutive month in October, up 3.79% from September. It outperformed
the nine-member Hang Seng Property Index, which fell for the first time in five months. It was down 1.06%
in October from the previous month's 11.72% surge. Both indices underperformed the broader Hang Seng
Index, which advanced 3.85% in October.
1
Fund performance
The Fund returned 3.3% (Bid-to-Bid) and underperformed the benchmark by 0.70% in October. Since
inception, the Fund has outperformed the benchmark by 1.60% p.a.
FUND PERFORMANCE
Total return, USD (%)
45
1 month
3 months
1 year
35
3 year*
21.1
15.3
15
9.7
3.3 4.0
5
-15
Since Inception*
28.5 28.7
25
-5
5 years*
17.6 16.9
7.0
3.3
0.8
-1.8
-3.4
Fund (Offer-to-bid)
Fund (Bid-to-bid)
-2.2
-3.8
-0.3
-0.8
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
Lend Lease traded higher during the month and was a key contributor. The fund manager remains
comfortable with project pipeline and earnings trajectory for the next couple of years. CapitaRetail China
Trust reported good results for Q3 2012 on the back of strong sales growth of tenants and rental reversion
across its portfolio. Longfor Properties also continued to do well in October as sales performance is
expected to improve.
Key detractors from performance
Hong Kong property stocks were adversely impacted as more property tightening measures in the form of
purchase and resale taxes were introduced in October. Among the Hong Kong names in the Fund, Sino
Land was among the key detractors for the month. Conversely, most names in Australia did well given the
yield differential versus government bonds. The Fund does not invest in Westfield Retail Trust which hurt
relative performance. Ciputra Development traded slower ahead of its Q3 2013 results that were released at
the end of the month. Post event, investors’ concerns were unfounded as the results were better than
expected.
Changes to the portfolio
Among the larger transactions during the month, the fund manager trimmed less attractively valued names
such as Goodman Group and Mirvac Group to add to Stockland and CapitaRetail China Trust 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 resilent 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
%
LEND LEASE GROUP
6.5
SINGAPORE
29.4
NIPPON BUILDING FUND REIT
5.9
AUSTRALIA
27.1
CHEUNG KONG (HOLDINGS)
5.4
JAPAN
17.2
GOODMAN GROUP CLOSED FUND
5.4
HONGKONG
12.9
JAPAN REIT
4.6
PHILIPPINES
4.4
CAPITARETAIL CHINA REIT
4.6
INDONESIA
2.6
MIRVAC GROUP UNITS
4.5
CHINA
2.2
FILINVEST LAND
4.4
THAILAND
2.0
WESTFIELD GRP REIT
4.1
MALAYSIA
1.5
SINO LAND
3.9
OTHERS
0.7
* 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 31 October 2012.
2. Market data from Bloomberg, 31 October 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.
MM272/211112