Despite what you may have read, not all investment funds have had a disappointing 12 months. In fact a select few have actually produced some bumper returns.
Australian Unity has a number of well performing, interesting investments that have bucked the trend over the last 12 months, despite challenging conditions. Here, we profile some of them.
Building health and wealth
Investors in the Australian Unity Investments Healthcare Property Trust have enjoyed double digit returns for the past 12 months. And it’s not hard to see why this is the case, when you consider the quality properties it has in its $400 million plus sized portfolio.
Chris Smith, portfolio manager for the Healthcare Property Trust, says that the Trust invests in Australia’s leading private hospitals and medical centres.
“These properties and the income returns they generate are very effective at shielding investors from economic ups and downs.
“The reality is there will always be a demand for medical services. People don’t forego looking after their health, as they may with discretionary purchases like clothing and holidays,” says Chris.
The Healthcare Property Trust – Wholesale Units returned 8.42 percent* for the year to 28 February 2009.
Bonds are back in vogue
One year ago you would have been hard pressed to find anyone interested in talking about good old fashioned fixed interest investments. But different times call for different investments and it seems that bonds are well and truly back in vogue.
High quality bonds can provide investors with a genuine alternative to cash. With cash rates likely to settle at around 3 percent, many investors are looking for alternatives.
Australian Unity Investments partnered with leading fixed interest manager Vianova Asset Management in 2005 and its performance in the fixed interest arena has been topping the charts ever since. Vianova does not follow a benchmark and believes in protecting investors’ capital at all costs.
Vianova sensed issues in the sub-prime mortgage market in the US long before it became public information and was able to position its portfolios accordingly. For the year to 28 February 2009 the Australian Unity Investments Vianova Strategic Fixed Interest Trust – Wholesale Units had produced a double digit return of 12.59 percent*.
Equity takes an income focus
For people familiar with global equity funds, it may come as a surprise to see the word “income” in the Australian Unity Wingate Global Equity Income Fund’s title. But the approach taken by Wingate Asset Management is quite unique.
The Wingate team places a premium on earning income for investors, and believes that while capital gains can be elusive, income can always be banked.
Wingate invests for the long term in very large, high quality and exceptionally well capitalised, global companies. Wingate also works to shield investors from the volatility that comes with investing in global share, through the use of options strategies.
While “options” is a word that can make investors’ alarm bells ring, Wingate uses options in a conservative manner as a means to enter and exit positions which lowers the cost price and produces income in the process. .
Chad Padowitz, Wingate’s Chief Investment Officer believes that fear and greed are the traditional causes of market ups and downs – and that this comes from people feeling either pessimistic or optimistic about the future. Wingate believes that occupying the middle ground between the two extremes provides the best outcome.
Chad is the first to admit that Wingate’s fund will grow less than the market in boom times, but highlights that it will also outperform when markets are performing badly.
The investment strategy significantly improves the probability of achieving a positive return in most markets.
Village Notes at 8%.
A series of Australian Unity’s successful Retirement Village Investment Notes# are available once again. The notes are a unique investment which combines Australian Unity’s expertise in two of its major businesses - retirement villages and managed investments.
This is the third series of notes following the first issue in 2005, and the biggest so far.
Australian Unity’s head of investments, David Bryant, says the notes are designed to provide a superior level of security as well as a good, regular income.
“In many cases, companies that raise funds through note issues are vague about how the funds will be used. Ultimately we have carefully designed this investment so that investors’ funds must be invested into ownership of Australian Unity retirement villages.
“This third note series will be acquiring interests in three of our retirement villages in New South Wales - Constitution Hill, Karagi Court and Kiah Lodge – all managed by Australian Unity.
“Effectively, the notes give you the benefit and much of the income of being a retirement village landlord, without all the hard work.”
The notes offer a fixed, regular income, with choice of three years at 8 percent per annum, five years at 8.25 percent per annum or seven years at 8.50 percent per annum. Interest is paid on a quarterly basis, with the principal repaid at the end of the specified term.
There are no entry, exit or ongoing fees, and reinvestment of interest is not available.
David believes the notes are a sound option for investors seeking a regular stable income over the medium term.
“The notes are an attractive alternative with a successful track record, paying a good return through regular quarterly instalments.”
According to David, there are other reasons to feel good about an investment in Australian Unity Retirement Village Investment Notes.
“The underlying assets are retirement villages, which are largely immune to market and economic cycles. Demand for retirement villages will not be affected by the national economic downturn in the same way as, say, demand for retail goods and office space.
“In fact, studies suggest an increasing acceptance in Australia of living in a retirement village and this, coupled with the aging population, means there continues to be a significant increase in demand for new retirement villages.
“A decade ago, just over three percent of Australians aged over 65 years lived in a retirement village. Today, the number is just over five percent, and it is predicted to increase to around eight percent by 2025,” says David.
He adds that Australian Unity’s 40 years of experience as an operator of retirement villages was another comforting factor for investors.
“Australian Unity has been in this industry since the 1970s and we know how to create communities that retirees will always want to come home to.”
Important Information
*Returns are calculated after fees and expenses and assumes the reinvestment of distributions. Past performance is not a reliable indicator of future performance. # The Notes are unsecured notes for the purposes of section 283BH of the Corporations Act 2001 (Cth). The Notes are not a bank deposit and have not been rated by a recognised credit rating agency, therefore an independent assessment has not been made about the risk of investors losing all or part of their principal; the interest rate of the Notes and repayment capital are not guaranteed.
MARCH 2009