- April saw global equity markets rally between 1% and 3% on market views that the interest rate tightening was coming close to an end and slowing inflation globally. Australian shares benefited from stronger consumer sentiment and an increase in national house prices, which in hindsight, contributed to the RBA’s surprise decision in early May to tighten interest rates after pausing at their April meeting.
- The Atlas High Income Property Fund gained by +3.3% in April, with the share prices of many companies held in the Fund starting to recover from the falls seen during the market panic in March. The falls in March were based on the assumption that property and infrastructure trusts could not increase revenues with inflation, and all had short-term variable rate debt. Currently, the average weighted debt maturity across the Fund is 4.7 years.
- The extreme market volatility over the past twelve months is very unusual and a result of a normalising of interest rates and, for many investors, their first experience with inflation. While exasperating, the Fund is populated with companies positioned to navigate changing market conditions with 1) long-term fixed-rate debt, 2) revenues tied to inflation and critically, and 3) valuations backed by actual comparable sales in the direct property market and not works of fiction.
Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2023.