In this video update, Ainslie McLennan, Co-Manager of the Janus Henderson UK Property PAIF, examines recent fund and market performance, discusses key factors the team consider as part of their investment process, highlights portfolio positioning and provides her outlook for the asset class.

Key takeaways:

  • While political and economic uncertainty levels remain high, the investment team believes that the fund remains well-positioned to deliver an attractive and regular income stream. This, they believe, should be well-supported by asset management activity.
  • Sustainability continues to be a key factor within the team’s investment philosophy
  • A balanced approach, with a diverse set of property assets across the industrial, office, alternatives and retail sectors continues to provide potential diversification benefits to investors
  • The fund has no allocation to regional offices* and is seeking to exit from its remaining regional high street assets*

*UK office / high street assets outside of London and the South East of England.

Year-to-date performance

9-month return to 30.09.19
Janus Henderson UK Property PAIF A Acc 1.6%
Janus Henderson UK Property PAIF I Acc 2.1%
Janus Henderson UK Property PAIF Feeder Fund A Acc 1.7%
Janus Henderson UK Property PAIF Feeder Fund I Acc 2.2%
IA UK Direct Property Sector peer group average 0.1%


Source: Morningstar as at 30 September 2019. PAIF & Feeder Fund returns, accumulation share class, bid to bid pricing basis, net of fees, in sterling terms from 01.01.19 to 30.09.19. Peer group comparator:  IA UK Direct Property. Performance data may change due to final dividend information being received after quarter end.

Discrete year performance

Sept 2014 to Sept 2015 Sept 2015 to Sept 2016 Sept 2016 to Sept 2017 Sept 2017 to Sept 2018 Sept 2018 to Sept 2019
Janus Henderson UK Property PAIF A Acc 9.8% -5.6% 7.8% 6.5% 1.6%
Janus Henderson UK Property PAIF I Acc 10.5% -5.0% 8.5% 7.2% 2.3%
Janus Henderson UK Property PAIF Feeder Fund A Acc 9.8% -5.6% 7.8% 6.5% 1.7%
Janus Henderson UK Property PAIF Feeder Fund I Acc 10.5% -5.0% 8.5% 7.2% 2.3%
IA UK Direct Property Sector peer group average 8.6% -2.6% 7.6% 5.8% -0.3%


Source: Morningstar as at 30 September 2019. PAIF & Feeder Fund returns, accumulation share class, bid to bid pricing basis, net of fees, in sterling terms. Performance data may change due to final dividend information being received after quarter end.

Peer group comparator:  IA UK Direct Property. The Investment Association (IA) groups funds with similar geographic and/or investment remit into sectors. The fund's ranking within the sector (as calculated by a number of data providers) can be a useful performance comparison against other funds with similar aims.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

Glossary

Alternatives sector – includes assets such as cinemas, gyms, hotels, food outlets, restaurants and care homes.

Asset management – can include refurbishment work to improve valuations and attract a better quality of tenant, changing the planning use of assets to increase rental revenue, or renegotiating existing leases to extend tenancies.

Average lease length – the average time to expiry of leases across a multi-let asset or a portfolio. It is weighted by rental income and assumes that all tenant break clauses will be exercised.

Long income – Rental income from tenants on long leases

*Regional office / high street properties – in the context of this video update, UK office / high street assets outside of London and the South East of England.

RPI leases – periodic increases in rent based on the retail prices index measure of inflation. Approximately a third of the fund’s income is currently from leases with fixed increases or increases based on the RPI.

Total return– the performance on a portfolio of investments, such as the PAIF or its Feeder Fund, taking into account the capital appreciation or loss on the assets owned, along with the income received by the portfolio, over a given period of time.

Void or vacancy rate – the proportion, usually expressed as a percentage, of a property or property portfolio that is without a tenant. Individual properties with higher vacancy rates can be less attractive to investors looking for stable long-term income, but may be more attractive for asset managers looking to add value through asset management activity.

Yield – A measure of the percentage of income return you receive from a property investment. This is calculated as the gross annual rent generated by a property, divided by its current valuation.

Yield shift – Movement in the yield of a property asset, or like-for-like portfolio, over a given period. In this case the reference is to ‘outward yield shift’ within the retail sector meaning yields move up as capital values overall have fallen.