Market | Portfolio update
11 | 2021
November began quite calm and equity markets climbed steadily, but then in the fourth week everything changed.
A new coronavirus variant was identified in South Africa and investors are worried about the growing possibility of a new series of lockdowns, which could curb the recovery. Additionally, Euro-area inflation raced ahead in November and raised concerns about a possible reaction of the ECB in December.
Only in the U.S. the recovery seems to be on track, so it is not surprising that the S&P 500 gained +1.31 percent followed by the Nikkei Index, which was down -0.91 percent, while the Eurostoxx 50 came in with a loss of -4.30 percent.
For a second month in a row, all regional real estate markets were in line or even outperforming the broader markets. The EPRA Global REIT index gained +0.45 percent last month and marked a new all-time high before falling back in the last week of November due to the pandemic. Surprisingly, it was Europe with the best performance and a gain of +1.11 percent, closely followed by North America with a gain of +1.02 percent. Once more, like in October, Asia took third place with a loss of -1.93 percent (all figures in EUR). The UK REIT index outperformed the European REIT Index by 1.6 percent and is now 916 basis points ahead year to date.
Our model portfolio ended November with a small setback of -0.33 percent. Therefore, the overall performance for the year summed up to +20.71 percent. It also realized +5.45 percent dividend yield so far this year (gross without withholding tax).
In November, there was a clear separation between the REIT sectors. On the one hand we find the stable sectors like industrial/logistics and data center, which promise stable earnings during the pandemic and in the long term. On the other hand, there are sectors like retail and lodging/resorts, which came under strong pressure again last month. Main reason for this clear differentiation was the newly emerged corona variant, which raised new concerns whether lockdowns and travel restrictions could occur again.
As uncertainty about the dangerousness of the Omnicron virus variant prevails at the moment, it’s too early to predict how the new virus and the ongoing fourth wave of the pandemic especially in Europe will impact the economic development during the next few weeks and months. Currently the U.S. looks like the most stable region, while China is slightly struggling. To sum up, we are still quite confident and expect a stable development until year end. Despite the new corona fears, REITs showed a quite strong resilience especially industrial/logistics and data centers. As our model portfolio is overweighted in these stable sectors, we are confident that our forecasted total return of 12 to 15 percent for 2021 will be reached if no hard lockdowns and travel restrictions will be implemented in December.
Your contact persons
Dr. Thorsten Schilling
+49 69 50602 6700