Atlas High Income Property Fund
Atlas Funds Management launched the Atlas High Income Property Fund in the first quarter of 2017. This Fund is now open to retail investors. More information on how to invest is available here.
Through a combination of trust distributions and additional income from selling calls, we aim to deliver a consistent 2% distribution per quarter or an 8% annual yield to investors.
This Fund utilises a detailed quantitative and qualitative analysis to create a concentrated portfolio of property securities within the Australian listed property sector.
The objective is to build a portfolio of high quality listed property securities that
(1) offer recurring earnings backed by rental streams, not one-off development profits,
(2) trade at a discount to NTA (net tangible assets), and
(3) have a lower level of gearing than the ASX200 Property Index.
(4) deliver a stable and growing stream of distributions to investors.
This approach has delivered lower volatility and avoided the value-destructive capital raisings that the less conservative property trusts were forced to make during the GFC.
The investment style for this Fund is based on quality investing. We seek to avoid risky property trusts, which are often those with a large proportion of earnings derived from one-off transactions. We aim to populate the portfolio with investments in trusts that have high-quality recurring earnings and improving earnings quality. In our experience, the market might misprice a trust’s earnings as low quality when the underlying fundamentals of that trust are improving.
Additionally, we seek to boost income by utilising an active strategy of selling call options over this portfolio of ASX-listed property securities. This effectively converts a portion of tomorrow’s uncertain gains into certain income today. The advantage of selling covered calls every quarter is that unlike other property funds that receive distributions from the trusts held twice a year in August and February, the Atlas High Income Property Fund will receive extra income four times a year. This will allow us to pay distributions quarterly to investors and we will be seeking to deliver an annual yield of 8% paid quarterly in arrears.
The Fund can also be traded online via the ASX’s mFunds service
The Fund’s Annual Report for 2018 is available here
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