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WRF structures solid fund with liquid features

Property is an important part of a balanced portfolio, but it appears, as Donal Curtin points out in his column that investors are missing out on some decent returns. Where to put property allocations is a tricky question.

Friday, November 17th 2006, 1:14PM
Property is an important part of a balanced portfolio, but it appears, as Donal Curtin points out in his column that investors are missing out on some decent returns. Where to put property allocations is a tricky question.

FundSource general manager Binu Paul says one of the issues facing the sector is that there is not a huge amount of choice for advisers and investors in what he calls the “unitised” product space. He says that some New Zealand funds are closed to new money as they are wound down and others which have been quite large, like the Guardian Trust fund are shrinking.

One option which Curtin talks about is the listed property trust sector. It is an important part of the market and one that investors and advisers should consider.

A benefit of this space is that there are listed property trusts in New Zealand, Australia and other countries. There are other options such as the proportionate schemes which tend to be single property offerings. These have been snapped up by advisers. Also there are funds like what Australian-based WRF Securities are promoting in New Zealand.

The current Property Fund offering is an open-ended fund that aims to buy high-yielding properties, but also hold cash and some listed property trusts.

WRF’s New Zealand representative Aaron Gascoigne says the fund offers investors a number of key features. One of these is its asset allocation as it hold three directly owned properties, cash (around 3%) and 12% of its assets in listed property trusts.

An issue property funds in the past is that they lacked liquidity to deal with redemptions. The problem being if a whole lot came through at once and the fund had no liquidity a manager would be forced to sell assets.

Gascoigne says since the fund has around 15% of its assets in liquid investments it can manage this issue if it arises. Another key feature is that the Property Fund is giving New Zealand investors exposure to the Australian market.

It is a well-documented fact that New Zealanders, generally, have a large exposure to their own country’s property market (exacerbated when investments are also held in vehicles such as mortgage funds which lend on residential property).

Gascoigne is of the view that the closed end property trusts, have to some degree, had their time and there is now growing investor interest in the open-ended funds.

The current fund makes monthly distributions and also there is a secondary market where investors can sell units.

For a copy of the investment statement go to www.wrf.co.nz

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

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