Commenting on the JPM Global Property Income Fund, Ng noted that “the team showed good security selection ability over the past three and five years, and it delivered stronger returns than that of the Franklin fund while maintaining a lower volatility”.
“That transferred to a better risk-adjusted performance over those periods,” Ng added.
Manager review
Wilson Magee joined Franklin Templeton as director of global REITs and portfolio manager in 2010. The fund is co-managed by Daniel Pettersson and Donna Ming-Yuan Lee. They are also research analysts specialising in real estate companies and REITs in Europe and Asia Pacific, respectively.
The team adopts a combination of a top-down and bottom-up approach to build the portfolio, and seeks to add value by investing into high-quality property companies.
The JPM Global Property Income is managed by Kay Herr and Jason Ko, who joined in 1999 and 2002 respectively. The duo spent most of their careers in real estate research and investment.
Like Franklin Templeton, the team takes into account industry trends and individual company performance when modelling for portfolio construction.
Fees
The management fees of both Franklin Global Real Estate and JPM Global Property Income are 1.50%, and the latest on-going charges are 1.85% and 2% respectively, Ng said.
“The fees of [the two funds] are very similar and in-line with market expectations and would not be a particular concern in terms of fund selection,” Ng said.
Conclusion
As mentioned earlier, the Franklin fund follows a benchmark and the JP Morgan fund does not. That plays a large role in distinguishing the funds.
“Given the high correlation, the Franklin fund should deliver returns which are pretty close to the market in general,” Ng said.
“The JPM team seems to be managing the fund more actively and has been posting stronger returns. It should suit investors who are actively looking for outperformance among the real estate asset class.”
In a broad sense, Ng noted that valuations of real estate securities are becoming increasingly expensive. “In the US, interest rates are expected to rise at some point, and the asset class may lose some of its attractiveness going forward.”
“Still, the correlation between real estate securities and global equity market is not high, and both these funds could serve as good vehicles to diversify risk from a broader base investment portfolio.”
