Pioneer Real Estate Shares

Transcription

1 Pioneer Real Estate Shares COMMENTARY Performance Analysis & Commentary September 2018 Fund Ticker Symbols: PWREX (Class A); PYREX (Class Y) us.amundipioneer.com Third Quarter Review Pioneer Real Estate Shares Class A shares returned -0.05% at net asset value in the third quarter, and Class Y shares returned 0.12%, lagging the 1.09% return of the Fund s benchmark, the Morgan Stanley Capital International (MSCI) US Real Estate Investment Trust (REIT) Index (the MSCI Index) 1. Stock selection was the main driver of the Fund s underperformance versus its benchmark this quarter. Allocation decisions also modestly detracted from returns. We continue to have a constructive view on stocks and real estate investments, especially given other alternatives. The Fund s benchmark, the MSCI US REIT Index, returned 0.78% during the third quarter of 2018, underperforming the broader US equity market, as measured by the Standard & Poor s 500 Index, which returned 7.71%. Despite a significant rise in US interest rates, US equity and credit markets enjoyed breakout performance in the third quarter due to strong US economic data. US markets outpaced European and most Asian markets. Second quarter US GDP growth rose to 4.2% and third quarter growth may approach 4%. Initial jobless claims saw an all-time low (since 1969), small business optimism rose to its highest level since its 1974 inception, and consumer confidence was at its highest level since Although wage growth rose to 2.9%, the best level since 2009, inflation expectations remained contained. Sector Allocation and Security Selection The Fund underperformed its benchmark for the third quarter, with relative underperformance driven mainly by stock selection, while sector allocation detracted modestly. With regard to sector allocation, underweight positions in the health care sector had the largest negative effect on the Fund s benchmark-relative results. In terms of stock selection, the Fund s benchmark-relative results were weakest in the office REIT sector, and strongest in the real estate services sector. With regard to individual portfolio holdings, among the top detractors from the Fund s relative performance in the third quarter were positions in CubeSmart, Extra Space Storage, and Thor Industries. CubeSmart and Extra Space Storage are two REITs that manage self-storage facilities throughout the United States. CubeSmart was down over 10% in the period while Extra Space Storage dropped over 12% as revenues slowed due to increased supply. Thor Industries, a manufacturer of recreational vehicles, dropped as high inventory levels at the dealer network continued to weigh on revenues. Individual portfolio holdings that contributed positively to the Fund s benchmark-relative performance this quarter included Encompass Health, NexPoint Residential Trust and Comfort Systems USA. Encompass Health provides post-acute health care services in the US through a network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. The stock was up over 15% in the period as volume continued to come in above expectations and reimbursement worries eased. NexPoint Residential is a REIT that focuses on acquiring multifamily properties in markets with attractive job growth and household formation fundamentals primarily in the Southeastern and Southwestern parts of the US. The stock had a strong quarter as multifamily fundamentals continued to come in better than expected. Comfort Systems USA provides heating, ventilation, and air conditioning installation and repair for the medical services industry. Comfort Systems benefitted from continued resiliency in nonresidential markets, operating efficiencies and strong pricing. 1 The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an as is basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the MSCI Parties ) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.

2 Current Outlook and Positioning Looking ahead, we continue to have a constructive view on stocks and real estate investments, especially given other alternatives such as fixed-income securities. We believe the current business cycle still has legs: the lack of outsized inflation should keep interest rates low the US economy is showing attractive Goldilocks-like growth (not too hot and not too cold) business confidence has improved the consumer is in good shape companies seem increasingly likely to invest in capital projects equity valuations are not unreasonable if interest rates do remain relatively low We acknowledge the risks involved with the current transition as the Federal Reserve moves from an expansionary monetary policy to a neutral, or possibly slightly restrictive policy. We also believe there is a risk that potential trade wars could slow the global economy. However, we believe both risks can be managed and that investors heightened awareness of the risks can actually have a benefit, as it could help in tamping down irrational exuberance. At the end of the third quarter of 2018, the Fund s largest overweight relative to the MSCI US REIT Index remains in the industrial REIT subsector. The Fund is underweight retail and office subsectors.

3 Performance Review Pioneer Real Estate Shares Class A shares returned -0.05% at net asset value in the third quarter, and Class Y shares returned 0.12%, while the Fund s benchmark, the Morgan Stanley Capital International (MSCI) US REIT Index, returned 1.09%. Average Annual Total Return (Class A shares) Average Annual Total Return (Class Y shares) September 30, 2018 (without sales charge ) (with sales charge) MSCI US REIT Index September 30, 2018 (without sales charge ) MSCI US REIT Index 1 year 0.75% -5.04% 3.74% 1 year 1.30% 3.74% 3 years 5.65% 3.58% 7.72% 3 years 6.07% 7.72% 5 years 7.84% 6.57% 9.16% 5 years 8.28% 9.16% 10 years 6.74% 6.11% 7.50% 10 years 7.30% 7.50% Expense Ratio (As of prospectus dated May 1, 2018) Class A shares: Gross, 1.48% Class Y shares: Gross, 1.12% Call or visit us.amundipioneer.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Class Y shares are not subject to sales charges and are available for limited groups of eligible investors, including institutional investors. The NAV results represent the percent change in net asset value per share. Returns would have been lower had sales charges been reflected. The POP performance data reflects deduction of the maximum 5.75% sales charge at the beginning of the period. All results are historical and assume the reinvestment of dividends and capital gains. Other share classes are available for which performance and expenses will differ. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers fund performance would be lower. Waivers may not be in effect for all funds. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus for more information. A Word about Risk: The Fund invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws. The Fund invests in a limited number of securities and, as a result, the Fund s performance may be more volatile than the performance of other funds holding more securities. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. When interest rates rise, the prices of fixed-income securities in the Fund will generally fall. Conversely, when interest rates fall, the prices of fixed-income securities in the Fund will generally rise. At times, the Fund s investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries or sectors. These risks may increase share price volatility. The MSCI US REIT Index is an unmanaged, widely used index comprising a broad representation of the most actively traded real estate trusts, and is designed to be a measure of real estate equity performance. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index. The views expressed in this commentary are those of the portfolio manager and are subject to change at any time. These views do not necessarily reflect the views of Amundi Pioneer or others in the Amundi Pioneer organization and should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any Amundi Pioneer investment product.

4 Securities Discussed Top 10 Holdings % of Portfolio as of September 30, 2018 Cubesmart REIT 2.4% Extra Space Storage REIT 2.7% Thor Industries 0.3% Encompass Health 1.0% Nexpoint Residential Trust 1.1% Comfort Systems USA 0.9% % of Portfolio as of September 30, Simon Property Group, Inc. 7.4% 2. Prologis, Inc. 5.9% 3. Equinix, Inc. 4.7% 4. Host Hotels & Resorts, Inc. 4.4% 5. AvalonBay Communities, Inc. 3.0% 6. Extra Space Storage, Inc. 2.7% 7. Digital Realty Trust, Inc. 2.7% 8. Equity LifeStyle Properties, Inc. 2.6% 9. Welltower, Inc. 2.5% 10. Sun Communities, Inc. (144A) 2.5% The portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any security listed. Before investing, consider the Fund s investment objectives, risks, charges and expenses. Contact your advisor or Amundi Pioneer Asset Management for a prospectus or summary prospectus containing this information. Read it carefully. Individuals are encouraged to seek advice from their financial, legal, tax, and other appropriate advisers before making any investment or financial decisions or purchasing any financial, securities or investment-related product or service, including any product or service described in these materials. Amundi Pioneer does not provide investment advice or investment recommendations

5 Not FDIC insured May lose value No bank guarantee Securities offered through Amundi Pioneer Distributor, Inc., 60 State Street, Boston, MA Underwriter of Pioneer mutual funds, Member SIPC 2018 Amundi Pioneer Asset Management us.amundipioneer.com