SA LISTED PROPERTY Bridge Fund Managers May 2017
Performance Equities Bonds Listed property Cash 10 Years (p.a.) 9.8% 8.1% 13.4% 7.3% 5 Years (p.a.) 12.7% 7.3% 15.3% 6.2% 3 Years (p.a.) 6.3% 7.9% 13.8% 6.8% 400 350 Last year 4.5% 10.6% 0.0% 7.6% Domestic asset class performance South Africa 300 250 200 150 100 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Equities Bonds Listed Property Cash 2
Historic drivers of return Comparative income yields 25 23 21 19 17 15 13 11 9 7 5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SA Listed Property (historic) SA Long Bonds 3
Historic drivers of return 25 Distribution growth vs. SA consumer inflation 20 15 10 5 - (5) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Distribution growth Inflation 4
Diversification benefits Comparative total return investment correlation SA REITs FTSE/JSE: All Share All Bond FTSE/JSE: Financials FTSE/JSE: Industrials FTSE/JSE: Top 40 FTSE/JSE: Small Cap Data period for upper right : March 2007 March 2017 SA REITs 1.00 0.25 0.71 0.70 0.48 0.18 0.61 FTSE/JSE: All Share 0.10 1.00 0.09 0.66 0.66 0.99 0.67 All Bond 0.69 0.10 1.00 0.49 0.37 0.04 0.36 FTSE/JSE: Financials FTSE/JSE: Industrials 0.65 0.66 0.51 1.00 0.74 0.61 0.75 0.40 0.56 0.49 0.72 1.00 0.59 0.75 FTSE/JSE: Top 40-0.01 0.99 0.00 0.58 0.48 1.00 0.61 FTSE/JSE: Small Cap 0.51 0.57 0.44 0.67 0.54 0.47 1.00 Data period for lower left : March 2012 March 2017 5
Sector growth since 2010 YEAR EQUITY CAPITAL RAISED 2010 R3.9 billion 2011 R16.3 billion 2012 R14.0 billion 2013 R21.6 billion 2014 R33.4 billion 2015 R32.2 billion 2016 R26.2 billion TOTAL R147.6 billion 6
Exposure to listed property growing Asset allocation of SA multi-asset CIS funds ASSET ALLOCATIONS 31/12/2016 31/12/2015 30/06/2015 31/12/2014 31/12/2013 Total Equities excl. Real Estate 33.5 31.7 32.5 33.7 35.1 Total Money Market Instruments 41.5 41.3 43.7 42.5 44.3 Total Real Estate 4.9 4.1 4.1 4.5 3.1 Total assets held in other CIS 20.1 22.5 19.8 19.3 17.5 Source: ASISA 7
Initial income yield Smaller companies offer value Relative valuation of SA listed property companies 13% 12% 11% 10% 9% Delta Indluplace Fairvest y = -0,4085x + 0,119 R² = 0,4973 8% 7% 6% 5% 4% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Medium-term distribution growth (annualised) 8
Conclusion Listed property remains the top performing asset class in SA over longer periods Initially declining bond yields drove relative outperformance Since 2005, distribution growth and rerating have driven outperformance Rerating a consequence of high, real growth in distributions as well as increased exposure to UK, Europe and Australia Increased offshore exposure adding to volatility in the sector Companies with offshore exposure at risk from Brexit (?), rising global bond yields & disruptions to the traditional mall model SA asset managers remain underweight listed property (long-term positive for the sector as managers continue increasing exposure) Smaller listed property companies offer investors initial yields well in excess of bond yields and long-term growth rates in excess of consumer inflation 9
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Disclaimer Nedgroup Investments Funds PLC (the Fund) is authorised and regulated in Ireland by the Central Bank of Ireland. The Fund is authorised as a UCITS pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (S.I. No. 352 of 2011) as amended from time-to-time. This document is not intended for distribution to any person or entity who is a citizen or resident of any country or other jurisdiction where such distribution, publication or use would be contrary to law or regulation. Nedgroup Investment (IOM) Limited (reg no 57917C), the Investment Manager and Distributor of the Fund, is licensed by the Isle of Man Financial Services Authority. The Fund and certain of its sub-funds are recognised in accordance with Section 264 of the Financial Services and Markets Act 2000. UK investors should read the Appendix for UK Investors in conjunction with the Fund's Prospectus which are available from the Manager. www.nedgroupinvestments.com. The Fund has been recognised under paragraph 1 of schedule 4 of the Collective Investment Schemes Act 2008 of the Isle of Man. Isle of Man investors are not protected by statutory compensation arrangements in respect of the Fund. Unit trusts are generally medium to long term investments. The value of your investment may go down as well as up. Past performance is not necessarily a guide to future performance. Nedgroup Investments does not guarantee the performance of your investment and even if forecasts about the expected future performance are included you will carry the investment and market risk, which includes the possibility of losing capital. Unit trusts are traded at ruling prices and can engage in borrowing and scrip lending. Certain unit trust funds may be subject to currency fluctuations due to its international exposure. Nedgroup Investments has the right to close unit trust funds to new investors in order to manage it more efficiently. A schedule of fees and charges and maximum commissions is available on request from Nedgroup Investments. The annualised total return is the average return earned by an investment each year over a given time period. The figures contained in this analysis are for illustrative purposes only and do not provide any guarantee of future returns. Nedgroup Investments shall not be liable for any loss, damage or expense, of any nature whatsoever, which may be suffered as a result of, or attributable to, the use or reliance upon the analysis provided in this document. Performance is calculated for each fund by taking the actual initial fees and all on-going fees into account for the amount shown, and income is reinvested on the reinvestment date. Individual investment performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. Please note that Nedgroup Collective Investments (RF) Proprietary Limited is not authorised to and does not provide financial advice. This presentation is of a general nature and intended for information purposes only. It is not intended to address the circumstances of any investor and cannot be relied on as legal, tax or financial advice, either express or implied. Whilst we have taken all reasonable steps to ensure that the information in this document is accurate and current on an ongoing basis, Nedgroup Investments shall accept no responsibility or liability for any inaccuracies, errors or omissions relating to the information and topics covered in this presentation. 11