For financial professionals in Italy

Global Perspectives Podcast: How much is stagflation a concern for REITs?

Portfolio managers Guy Barnard and Greg Kuhl join Adam Hetts, Global Head of Portfolio Construction and Strategy to discuss REITs’ performance to-date and the impact of stagflation concerns, rising rates, and higher energy and other input costs on the sector.

Key Takeaways

  • Year-to-date, global REITs have delivered returns in the middle of global equities and global government bonds, providing a more resilient, defensive income stream, with typically less exposure to short-term earnings from the global economy.
  • Stagflation and rising energy costs remain a risk. Landlords with pricing power are increasingly differentiating themselves and should see more resilient demand and growth.
  • Should bond yields and interest rates move significantly higher, this could impact property capital values. However, most REITs have been very proactive in recent years extending and fixing their debt book, which should reduce their exposure to short-term rate rises.
  • There is an increasing focus on the sustainability of buildings, particularly in the office market where there is a huge polarisation in tenant demand and asset value between more sustainable, environmentally-efficient, lower energy costs buildings and those that lack these characteristics.

Greg Kuhl, CFA

Greg Kuhl, CFA

Portfolio Manager


Guy Barnard, CFA

Guy Barnard, CFA

Co-Head of Global Property Equities | Portfolio Manager


20 Apr 2022

Key takeaways:

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

 

Past performance does not predict future returns. 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.

 

The information in this article does not qualify as an investment recommendation.

 

Marketing Communication.

 

Glossary

 

 

 

Important information

Please read the following important information regarding funds related to this article.

Janus Henderson Capital Funds Plc is a UCITS established under Irish law, with segregated liability between funds. Investors are warned that they should only make their investments based on the most recent Prospectus which contains information about fees, expenses and risks, which is available from all distributors and paying/facilities agents, it should be read carefully. This is a marketing communication. Please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The rate of return may vary and the principal value of an investment will fluctuate due to market and foreign exchange movements. Shares, if redeemed, may be worth more or less than their original cost. This is not a solicitation for the sale of shares and nothing herein is intended to amount to investment advice. Henderson Management SA may decide to terminate the marketing arrangements of this Collective Investment Scheme in accordance with the appropriate regulation.
    Specific risks
  • Shares/Units can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • Shares of small and mid-size companies can be more volatile than shares of larger companies, and at times it may be difficult to value or to sell shares at desired times and prices, increasing the risk of losses.
  • The Fund is focused towards particular industries or investment themes and may be heavily impacted by factors such as changes in government regulation, increased price competition, technological advancements and other adverse events.
  • The Fund invests in real estate investment trusts (REITs) and other companies or funds engaged in property investment, which involve risks above those associated with investing directly in property. In particular, REITs may be subject to less strict regulation than the Fund itself and may experience greater volatility than their underlying assets.
  • The Fund may use derivatives towards the aim of achieving its investment objective. This can result in 'leverage', which can magnify an investment outcome and gains or losses to the Fund may be greater than the cost of the derivative. Derivatives also introduce other risks, in particular, that a derivative counterparty may not meet its contractual obligations.
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Greg Kuhl, CFA

Greg Kuhl, CFA

Portfolio Manager


Guy Barnard, CFA

Guy Barnard, CFA

Co-Head of Global Property Equities | Portfolio Manager


20 Apr 2022