Monthly Briefing
Market | Portfolio update
10 | 2021
It was a surprisingly good start into autumn and the last quarter of the year, although the recovery is losing momentum across the major economies. Inflation, meanwhile, remains high – due to continued supply chain disruptions and rising energy costs.
For now, the major central banks are preserving optionality as they consider the spike in inflation as temporary. A continuation of the current trends would leave them without easy answers.
Despite that, the further easing of Covid 19-restrictions and a lot of available capital in the U.S. and Europe outweighed the concerns over inflation last month. The S&P 500 gained +7.30 percent followed by the Eurostoxx Index, which was up +5.20 percent. Nikkei came in at the third place with a loss of -3.91 percent.
In October all regional real estate markets were in line or even outperforming the broader markets. The EPRA Global REIT index gained +6.76 percent last month and marked a new all-time high. North America was the best performing region with a gain of +8.12 percent, followed by Europe with a gain of +5.08 percent. Asia took third place with +1.94 percent (all figures in EUR). The UK REIT index outperformed the European REIT Index by 0.64 percent and is now 700 basis points ahead year to date.
Our model portfolio ended October with a gain of +5.66 percent. So, the overall performance for the year so far summed up to +21.11 percent. It also realized +5.25 percent dividend yield so far this year (gross without withholding tax).
In October, all sectors within the REIT universe showed positive performance. Self-storage and industrial were outstanding with double-digit growth. In the U.S. REITs have numerous available capital sources to fund expansion opportunities that may arise, the opposite is true in Asia as the debt burden is much higher there. Continued access to capital mitigates refinancing risk, helps keep balance sheets clean, that is the main reason why U.S. REITs had a golden October.
Overall, Retail as the most wanted sector of the first half this year is now outperformed by several other sectors like self-storage, residential and industrial. Investors are still cautious due to the quite unclear further developments in retail and prefer other sectors where future trends are considered to be more stable and secure.
As the outlook for global growth is slightly weaker for the whole year, reflecting a disappointing third quarter in the U.S. and elsewhere, economists expect a slightly stronger fourth quarter, so we are confident as well and expect a stable development, although the risk of a fourth wave of the pandemic with stronger measurements is still there.
As mentioned above with 5.25 percent dividend yield so far, our forecasted goal of a dividend yield of 5.0 to 6.0 percent has been reached two months before year end and a total return of 12 to 15 percent for 2021 should be reachable as well, if no further black swan event will occur until year end.
Your contact persons
Dr. Thorsten Schilling
Thorsten.Schilling@deacapital.com
+49 69 50602 6700
