November saw the recovery continue from September’s lows as equity markets rallied after the US Federal Reserve Chairman indicated that the rate hikes could slow from December onwards. Domestically the RBA raised the cash rate by only 0.25% rather than the expected +0.5%, contributing to the view that the central bank tightening of interest rates is coming to an end. A positive move for interest-rate-sensitive stocks.
The Atlas High Income Property Fund gained +3.4%, with the share prices of many companies held in the Fund now recovered from the falls seen during the market panic in September. The falls in August and September were based on the assumption that property and infrastructure trusts could not increase revenues with inflation and all had short-term variable rate debt. While some companies structured their debt in this fashion before the GFC, few are in this precarious position in 2022!
The Fund is populated with Trusts that deliver stable earnings today, revenue that increases in line with inflation and debt hedged for an average of 5 years. As such, inflation and rising debt costs will less impact profits than markets fear. In December, a large number of companies held in the Fund will declare dividends which are expected to show the resilience of company earnings.
Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2023
