Monthly Briefing
Market | Portfolio update
08 | 2021
Euro-area inflation jumped to the highest in a decade in August and shocked the European markets.
But the ECB reassured that monetary policy would stay loose, as they see this jump only as temporarily. The U.S. economy has entered a more mature recovery stage. Easing restrictions and mass vaccinations allowed consumer spending to regain its long-held status as the key economic engine for the U.S. The S&P 500 gained +3.49 percent followed by the Nikkei Index, which was up +3.28 percent. Europe came in at the third place with a gain of +2.63 percent.
In August all regional real estate markets slightly underperformed the broader markets. The EPRA Global REIT index gained +2.02 percent last month. Europe was the best performing region with a gain of +3.00 percent, followed by North America with a gain of +2.06 percent. Asia took third place with +1.35 percent (all figures in EUR). The UK REIT index outperformed the European REIT Index by 0.8 percent and is now 440 basis points ahead year to date.
Our model portfolio ended August with a gain of +2.82 percent. So, the overall performance for the year so far summed up to +19.89 percent. It also realized +4.62 percent dividend yield so far this year (gross without withholding tax). In August, only Healthcare and office had no positive performance. For healthcare the reason was some profit taking but for office sector it was more the uncertainty about how the underlying office property is resilience against vacancy due to the future share of working from home, and therefore share prices may not reflect their full value until occupiers make their space decisions.
All other sectors showed positive performance last month and again data centers and industrial/logistics were at the top as they are still seen as safe havens. Retail started rebounding last month as retail risks unwound a little bit and post-Covid-19 working practices were established. This may lead to outperformance of retail, but it’s a risky strategy given the road to recovery may be bumpy. Data center and logistics-focused REITs, supported by demand that still exceeds supply, are seen as a more stable perspective for the next months and therefore we still prefer these two sectors over retail.
It seems that the Covid pandemic fades and the recovery continues, and central banks edge toward normalizing policy but that is far from a certainty. The risk that in many countries the fourth wave will lead to stronger measurements in autumn and winter is still there. Nevertheless, we are optimistic for the next months, and expect a stable development.
Therefore, we are confident that our forecast of a dividend yield of 5.0 to 6.0 percent and a total return of 12 to 15 percent for 2021 will be reached.
Your contact persons
Dr. Thorsten Schilling
Thorsten.Schilling@deacapital.com
+49 69 50602 6700
