AmInvest wants to increase exposure to REITs but rates M'sia as underweight

KUALA LUMPUR (Sept 7): AmFunds Management Bhd, or more commonly known as AmInvest, has rated Malaysia's real estate investment trust (REIT) as "underweight", despite seeking to double its investment to RM500 million in that asset class by next March.

Chief investment officer of equities Andrew Wong Yoke Liong said the fund's REITs exposure is currently concentrated in Australia, Japan, and Singapore. Part of the reason for this is because these countries have "differential assets" — non-traditional REITs that focus on properties related to healthcare, childcare, energy, and data centres.

"Our exposure to Malaysian REITs is only about 8% of the total REITs under our investment," said Wong at a media briefing. "We take into account the current supply and demand, and Malaysia's property sector is currently facing a slowdown, with offices seeing drops in occupancy rates."

Wong did not divulge as to which Malaysian REITs AmInvest is investing in, although Pavilion REIT was the only one from this country that made it to 10 of its biggest holdings in Asia Pacific REITs, according to a slide prepared by AmInvest.

"Generally, our investments in Malaysian REITs are those that have very high occupancy. And we also have some in logistics REIT," said Wong.

As at yesterday, AmInvest's REIT assets under management (AUM) were worth RM267 million. By the end of its financial year ending March 31, 2017, the fund has plans to increase it to RM500 million.

REITs all over the world underwent a renaissance of sorts this year, as investors seek refuge in safe havens, when central banks cut their interest rates.

However, with expectation for U.S. Federal Reserve raising its interest rates further this year and next, Wong said this would not hamper investors' sentiments towards REITs.

As long as the investment trusts' growths outpace those of the interest rates' increase, they would still be favoured.

"We've seen how Singaporean REITs performing well when they first started, despite having interest rates increasing," he said.

AmInvest's AmAsia Pacific REITs gave out 3.31 sen per unit in FY16, one of its highest since FY12.

In total, AmInvest's AUM was valued at RM36.7 billion as at July 2016, growing by an annualised 8% since December 2010. — theedgemarkets.com

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