APN Asian REIT Fund management fees cut by 50%. Why?

Usually a fund manager only slashes management fees to pacify investors suffering poor returns. Should our decision to cut APN’s Asian REIT Fund management fees in half for all current investors, and new ones applying before the end of the financial year, therefore be a concern?

Absolutely not. Currently delivering an attractive distribution yield of more than 6%, to date the APN Asian REIT Fund has delivered a total return of 17.63% per annum since it was launched in 2011*. So why are we reducing the management fee and changing dividend payments to monthly rather than quarterly?

Well, given that performance, this fund should be more popular with investors than it is. That though, is not the only reason. In our view, many income investors disregard Asian investment opportunities at their cost. We hope cutting our management fee will help investors wary of Asian exposure to think more deeply about how their income-based portfolios might benefit from careful exposure to developed, rather than developing, Asia.

That distinction is important. When investors hear the word ‘Europe’ they think of London, Paris and Berlin, rich cultures that symbolise how we think of Western civilization, with its democratic origins, political stability and separation of powers. Asia provokes a different reaction. Instead of mental images of creative, dynamic economic hubs like Tokyo, Singapore and Hong Kong, we ruminate on political despotism in places like China and army rule in Thailand, on their weak property rights and unpredictable legal systems.

Investing in Asia can mean many things, but for APN’s Asian REIT Fund it means exposure to high quality commercial property investments in Asia’s most globalized cities – Hong Kong, Singapore and Tokyo.

There’s a reason for that. In the same way that Germany is not Greece and Sweden is not Portugal, Singapore is not Indonesia, Tokyo is not Tianjin and Hong Kong is not Huangzhou.

This vital distinction is how we’ve delivered reliable, attractive returns for income-driven investors that want exposure to Asia’s booming middle class, without the risks that investing heavily in, say, Indonesia and China might entail. We think the performance of the APN Asian REIT Fund offers stout support for this strategy.

Consider the 50% reduction in our management fee a sweetener, an inducement to evaluate a fund that features a distribution yield of more than 6%*, paid monthly, generated from cities that link the world to its greatest-ever industrialization. Now, isn’t that worth a closer look?

For more details about APN’s Asian REIT Fund, its performance or to apply click here

Important Information

Change from quarterly to monthly distributions

Effective from 1 January 2016, the APN Asian REIT Fund (‘Fund’) is paying distributions monthly (previously paid quarterly).

We understand a large number of investors appreciate frequent and regular income payments from their investments and we are pleased to be able to increase the frequency of the Fund’s distributions. The annualised distribution amount paid by the Fund will not change as a result of the move to monthly distributions. Investors will receive the same annual distribution amount, but paid in 12 monthly payments, rather than in four quarterly payments.

The first monthly distribution was paid on 10 February 2016 and distributions will be paid monthly thereafter.

Investors are also reminded of their ability to participate in the Fund’s Distribution Reinvestment Program which continues to be available.

Special 50% reduction in management cost

The Fund currently charges investors a 1.20% pa management cost. We are offering a special 50% reduced management cost for all existing investors and those new investors who apply by 30 June 2016. This will reduce the cost to these investors by 0.60% pa and will make a material difference to investors’ returns.The Fund currently charges investors a 1.20% pa management cost. We are offering a special 50% reduced management cost for all existing investors and those new investors who apply by 30 June 2016. This will reduce the cost to these investors by 0.60% pa and will make a material difference to investors’ returns.

APN has made this change to reward investors who have participated in the Fund’s success to date and to increase the income returns for existing and new investors who hold units during the period ending on 30 June 2016.

The details of the change and the offer are as follows:

  • The special 0.60% pa management cost will apply for three years from 30 June 2016 until 30 June 2019. After 30 June 2019, the management fee will revert to 1.20% pa.
  • The benefit will be paid by way of an issue of bonus units at the current issue price, which will be paid quarterly.
  • Existing investors and new investors who apply before 30 June 2016 will receive the 50% reduction on management costs on their total investment balance until 30 June 2019.
  • New investors applying for units after 30 June 2016 will be charged the full management cost of 1.20% pa.
  • The fee reduction applied from 17 March 2016.

*Total performance to 29 February 2016. Distributions may include a capital gains component. Assumes distributions are reinvested. Investors’ tax rates are not taken into account when calculating returns. Returns calculated since 19 July 2011 (when the Fund commenced). Current distribution yield is calculated daily by dividing the annualised distribution rate by the latest entry unit price. Distributions may include a capital gains component. Past performance is not an indicator of future returns.

Important information

This summary has been prepared by APN Funds Management Limited (APNFM) (ACN 080 674 479 ABN 60 080 674 479, AFSL No 237500) for general information purposes and whilst every care has been taken in relation to its accuracy, no warranty is given or implied. APNFM is a wholly owned subsidiary of APN Property Group Limited ACN 109 846 068. APNFM is the responsible entity and issuer of the APN Property Group products covered in this update. The information provided does not constitute investment advice and does not purport to contain all relevant information necessary for making an investment decision. It is provided on the basis that the recipient will be responsible for making their own assessment of their financial needs and will seek further advice about the investment as is considered appropriate. General risks apply to an investment in APN funds and must be considered before making an investment. Returns shown are for retail investors, net of fees and costs and are annualised for periods greater than one year. Returns and values may rise and fall from one period to another. Past performance is not an indication of future performance. This update may contain certain “forward-looking” statements. Actual outcomes may differ materially from these forward-looking statements and no representation or warranty is given in relation to these including as to their completeness or accuracy on the basis on which they were prepared.

In deciding whether to invest or continue to hold an investment in an APN fund, a person should obtain a copy of the Product Disclosure Statement for the relevant fund and consider its content. We recommend that a person obtain financial, legal and taxation advice before making any financial investment decision. A copy of the PDS is available from APN Funds Management Limited, at Level 30, 101 Collins Street, Melbourne 3000 or by visiting www.apngroup.com.au.