Resolution Capital Global Property Securities

Ross Macmillan  |  13/09/2016Text size  Decrease  Increase  |  
email_fwd

Ross Macmillan: For Morningstar, Resolution Capital has a number of outstanding qualities, including a very strong investment team and outstanding investment philosophy. The investment team is led by Andrew Parsons, who worked for a number of years at Lend Lease. He is the founder of Resolution Capital. He is also the managing director and portfolio manager. He is backed by a team that is extremely strong and has considerable knowledge and outstanding insights into the global property market. However, importantly, all four portfolio managers undertake the same research, assessment and valuation procedures when they are looking at the real estate stocks that they intend to invest in.

Resolution Capital's investment philosophy is based around a number of important principles. Those principles are very Warren Buffett-like. The first one is, they focus on the real estate asset, not an index or a benchmark. Secondly, they try to understand that real estate property is capital-intensive and is also cyclical. Next, they look at management. They believe that strong stewardship is very important. And lastly, and most importantly, they make sure that there is no permanent impairment to capital. They do not believe that they should be responsible for losing investors' capital.

What gives Morningstar confidence about Resolution Capital is its stable, repeatable and outstanding investment process. Firstly, there is a large universe of global listed real estate stocks. Resolution Capital undertakes qualitative and quantitative research procedures to reduce that number of stocks. It uses its proprietary investment database, Swordfish, firstly to eliminate and evaluate a large number of stocks. It then looks at a number of key factors. It looks at balance sheet strength. It looks at the assets. It looks at the quality of those real estate assets. It looks at the location of those real estate assets. And it looks at factors like occupancy rates. It also looks at long-term earnings ability. It combines all these factors and ranks those global real estate stocks so that it can decide which ones to include in its portfolio. It's important to note that Resolution Capital does this on a sector basis. They look at the hotel sector, the healthcare sector. They look at the industrial sector and they also look at the retail sector for real estate. They look at that across North America, the UK, China, Australia, and Europe and select the best stocks for inclusion in the portfolio.

It's important to diversify across asset classes and certainly global property is extremely important. Resolution Capital will give an investor excellent exposure to a number of sectors in the real estate area. It will give investors exposure to office, industrial, retail, healthcare and hotel property sectors and it will also give great geographic exposure. It has invested in stocks in North America, where it's done extremely well, the UK, Europe, Australia, Hong Kong and China, and also Japan. The flagship fund is currency-hedged and that's important for investors because they don't have to worry about currency movements, just the real estate assets that are included in the portfolio.

Resolution Capital has been consistent, reliable, and outstanding over a number of years and it has a quality bias of real estate stocks in its portfolio, which should ensure that even in a bear market investors get considerable returns.

Video Archive...

Should investors be concerned by North Korea?
25/09/2017  Mark Williams, manager of the UK-based Liontrust Asia Income fund, talks about Kim Jong Un, Donald Trump, and the impact on stock market returns.
Did lack of transparency cause the financial crisis?
19/09/2017  Ten years after the collapse of Northern Rock, Andy Agathangelou tells Emma Wall that greater transparency in financial services could ward off a second global financial crisis.
Are we facing another Global Financial Crisis?
19/09/2017  Ten years on from the collapse of Northern Rock, Dan Kemp tells Emma Wall how there are echoes of the crisis in markets today.
Wild ride in FY17 and more to come - part 2
13/09/2017  Morningstar's Peter Warnes discusses how you may want to position your portfolio in FY18, as geopolitical storms continue to rage and safe-haven assets feel the effects.
Wild ride in FY17 and more to come - part 1
12/09/2017  Cost-out remained a dominant theme for large-cap Australian companies in FY17, and looking ahead to FY18, they should be clearer on cap-ex, says Peter Warnes, Morningstar’s head of equities research – Australasia.
Deeper demand driving these pooled investments
31/08/2017  Listed investment trusts are beginning to take off in Australia, but exactly what are they and how do they differ from listed investment companies and managed funds?
Upbeat Woolies result tempered by Big W
30/08/2017  Woolworths' category-topping FY17 result driven by surprisingly strong sales, even as sector faces tougher times ahead, explains Morningstar's Johannes Faul.
Coke Amatil 1H17 result leaves margin of safety
28/08/2017  A challenged earnings announcement from Coca-Cola's Australian-listed business was largely expected, but downside is already priced in and improvements are expected in FY18.
How slashed Telstra dividend affects our outlook
23/08/2017  Brian Han remains reasonably positive on the telco giant even after some disappointments in the FY17 earnings announcement.
Earnings season FY17 mixed bag so far
18/08/2017  Aside from a few high-profile earnings guidance misses, large-cap stocks are doing okay as FY17 reporting season passes halfway, says AMP chief economist Shane Oliver.
Rio Tinto posts mixed result for 1H17
10/08/2017  An interim result of US$3.9 billion in net profits after tax for one of the world's largest mining companies was positive but slightly weaker than expected, even alongside a record dividend, explains Morningstar's Mat Hodge.
Kerr Neilson on why global investment exposure is key
07/08/2017  There are two types of investors, regardless of market noise, imputation credits, diversification approaches and market indices, says the managing director of Platinum Asset Management.
Finding fixed income opportunities in new paradigm
02/08/2017  Slowing economic growth in the US and parts of Europe emphasises the need to carefully select credit opportunities, says Vincent Reinhart, chief economist, Standish Mellon Asset Management.
Telstra won't be blown away by headwinds
17/07/2017  While it faces what Morningstar equity analyst Brian Han describes as a whirlwind of negatives, he suggests investors shouldn’t hang up on Telstra.
The home-truths of investing
12/07/2017  Look for companies that sit outside the cycle; heed the lessons of history; and remember the power of compounding, says Bennelong's Neale Goldston-Morris.
Self-managed super is not Do-it-yourself
03/07/2017  There are a few common pitfalls in running a self-managed super fund that mean trustees shouldn't go it alone entirely, says BT Financial Group's head of financial literacy, Bryan Ashenden.
Investing to protect on the downside
30/06/2017  There are investment strategies you can adopt to mitigate volatility-linked fear and uncertainty in markets, explains Roy Maslen, chief investment officer – Australian equities, AllianceBernstein.
Don’t overdo benchmark consideration
28/06/2017  Being benchmark agnostic is the most effective approach to fixed income investing, according to Anujeet Sareen, portfolio manager, Brandywine Global.
Factor-based investing using ETFs
26/06/2017  Investors should consider style-exposures--such as value, defensive or yield-- they would like in their portfolios, explains Jonathan Shead, head of portfolio strategists – Asia Pacific, State Street Global Advisors
Volatility plays to active manager strengths
--  The climate of political volatility in the US holds important implications for investors and the funds they invest in, particularly around Donald Trump's ability to pass legislation through Congress, says Pimco's Libby Cantrill.