NZ Fund Managers

[Snoopy]

NZ listed property fund managers tend to run what I term an 'index +' portfolio, as I have describer in post 100. The reference index, in this instance consists of just eight investment entities. I have listed these in the table below. A fund manager who wishes to put their own sparkle on their portfolio must deviate from the index, even if by only a small amount. 'Investment sparkle' is just a term I have coined to describe whether an investment manager decides to take an underweight or overweight position from any entity in our 'class of eight'. Whether these 'breakaway investment decisions' are successful (or not) is, in the fullness of time, determined by the market.

In summary, the two factors that determine the effect of a market position 'away from the index norm' are:

a/ The size of the piece of the entity our fund manager wants to 'overweight' or 'underweight' -multiplied by-
b/ The percentage change in the unit price of that entity over our investment time-frame (in this case between 30-06-2022 and 30-06-2023).

The table below is meant to demonstrate how a deviation from the index template might have affected individual fund managers performance over the 30-06-2022 to 30-06-2023 year. The table starts with changes in constituent share price movements over the period.

	Share Price 30-06-2022 {A}	Share Price 30-06-2023 {B}	Percentage Change {{B}-{A}}/{A} or {C}	Relative Capitalisation 30-06-2023 (post 97)	Relative Capitalisation 30-06-2022 {D}	Weighted Percentage Change 30-06-2022 {C}x{D}	Normalised Weighted Percentage Change 30-06-2022 (3)
Precinct Properties	$1.37	$1.29	-5.84%	17.7%	18.1%	-1.057	-3.38
Stride Property Group	$1.66	$1.40	-15.7%	6.62%	7.56%	-1.186	-3.79
Property for Industry	$2.44	$2.365	-3.07%	10.3%	10.2%	-0.3131	-1.00
Kiwi Property Group	$0.975	$0.91	-6.66%	12.4%	12.8%	-0.8525	-2.72
Goodman Property Trust	$2.00	$2.22	+11.0%	26.9%	23.3%	+2.563	+8.19
Vital Healthcare Properties	$2.695	$2.34	-13.2%	13.4%	14.8%	-1.954	-6.24
Investore Property	$1.59	$1.40	-11.9%	4.51%	4.93%	-0.5868	-1.87
Argosy Property	$1.16	$1.115	-3.88%	8.17%	8.20%	-0.3182	-1.02
Total				100%	100%

Notes

1/ The above table does not account for cash issues during the year, nor dividend payouts.
2/ The stand out in the table above is the Goodman Property Trust, the only index constituent to make a capital gain during the year.
3/ Normalisation is based around the relative effect of holding Property for Industry (PFI). Changes away from the representative holding of PFI are the least impactful change you can make to a portfolio and so have been allocated the number '1' on the relative changes scale.
4/ Sample calculation for relative capitalisation for 30-06-2022, Precinct Properties:
Share price loss means the relative capitalisation for YE30-06-2023 has been reduced from its YE30-06-2023 level. What was the indicative relative portfolio position before the share price reduction?

P x (1 - 0.0584) =17.7% => P= 18.80%

If you do this exercise for all eight entities in the table, you will find the summed previous percentages, like the 18.8% I have calculated above, do not sum to 100. Let's say they sum to 10'x'%, where 'x' is a number greater than zero. That means you have to reduce the percentage figure 'P' calculated above by the fraction 100/10'x'. (Note that in this particular column-er example, the multiplication factor turns out to be 100/103.77, where 'x' is 3.77):

18.8% x 100/103.77 = 18.1%



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How does one use the table above? Choose a particular constituent company from any 'NZ property 'fund managers fund', expressing it in the form of a percentage of the fund total. Subtract that percentage from the same company figure in table column {D}. If the figure is positive, then this is the fund's overweight position in that share. If it is negative, then that represents the fund's underweight position.

The last two columns are there to show how the actual change in share prices during the period, affected overall portfolio composition, in relative terms.

SNOOPY