Nikko Asset Management’s (Nikko AM) Shenton Global Property Securities SGD fund emerged as one of the winners of the Best Funds Awards 2024 by The Edge Singapore, in the global real estate sector equity category based on data from Morningstar.

The fund, which aims to provide investors with medium-to-long-term capital appreciation and regular income distributions, invests globally in real estate investment trusts (REITs) and listed or traded real estate companies.

As at Feb 29, more than half (51%) of the fund’s allocations are in the US, followed by Singapore at 17.2% and Japan at 11.3%, with its remaining holdings spread across Australia and Europe. Meanwhile, 25.1% of the fund’s REITs belong to the industrial sector, followed closely by specialised REITs at 23.5% and real estate management and development REITs at 17.0%.

The fund’s top five holdings are Digital Realty Trust at 6.7%, Simon Property Group at 6.3%, CBRE Group Class A at 5.6%, Weyerhaeuser Co at 5.3% and Prologis at 5%.

Rob Samson (pictured), joint head of global multi-asset at Nikko AM, looks back on the US investment market last year as an interesting one. “There was a broad shift in leadership in 2022 from US tech to energy and generally value-tilted equities less sensitive to higher rates, so we were taken off guard by the sharp reversal back into tech from early 2023.”

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He continues: “However, the markets often surprise, which means you have to review the new facts with an open mind. ChatGPT was released in late 2022, collecting new users at a pace never seen before, and by early 2023, it was soon clear that there would be very significant investment in tech and AI opportunities.”

rob samson

Photo: NikkoAM

Meanwhile, although Samson thinks that the US Federal Reserve (Fed) will lower rates once in 2024, he is “very open” to the idea that nothing could happen at all.

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“Over the past 12 months, we have suspected that inflation would be stickier than the market expected, with the last push towards the 2% inflation target requiring more restrictive rates than the bond market was forecasting. Recent data has confirmed that this may indeed be the case. In addition, the US government continues to run a budget deficit that is in expansionary territory,” explains Samson.

Despite attributing his expectation of a rate cut to the view of the present rate stance as being “restrictive”, especially with inflation below the peak of 2022, Samson also sees inaction by the US Fed as “finely balanced”, given that the country’s data of GDP growth of above 3%, unemployment below 4%, and inflation above 3% does “not confirm” that rates are currently in a restrictive setting.