NFO review: Mahindra Manulife Asia Pacific REITs FOF
For those looking to diversify beyond domestic stocks, here is an alternative. But unlike the options that ask you to bet on US stocks, this product is truly different. Mahindra Manulife MF has launched Mahindra Manulife Asia Pacific REITs FOF, an open-ended fund of fund scheme investing in Manulife Global Fund â€“ Asia Pacific REIT. REIT stands for real estate investment trusts. The NFO will close on October 12, 2021. Here are more details.
Investment objective, asset allocation
The investment objective of Mahindra Manulife Asia Pacific REITs FOF is to provide long-term capital appreciation by investing predominantly in units of Manulife Global Fund â€“ Asia Pacific REIT Fund, an overseas fund primarily investing in real estate investment trusts (REITs) in the Asia Pacific ex-Japan region.
International REITs are a great way to diversify a portfolio and build exposure to real estate markets worldwide. Apart from this NFO, the only other comparable product is Kotak International REIT FOF, which was launched in Dec-2020. Kotak REIT FOF’s 6-mopnth performance has been a mere 1.59% compared to the index S&P BSE 500 TRI’s 22.39%.
Here is an idea of the asset allocation pattern of the scheme under normal circumstances. A 95-100% of money would be invested in Units / shares of Manulife Global Fund â€“ Asia Pacific REIT Fund. The balance 0-5% would be invested in debt and money market securities (including TREPS (Tri-Party Repo), reverse repo) and/or units of liquid schemes.
The scheme will not invest in derivatives. However, the underlying fund may invest in derivatives for effective portfolio management and hedging purposes.
About the underlying fund
Mahindra Manulife Asia Pacific REITs is a fund of fund. This means the scheme will invest into the underlying fund i.e. Manulife Global Fund – Asia Pacific REIT Fund. This is one of the sub-funds under Manulife Global Fund, a Luxembourg-domiciled open ended investment company.
The sub-fund will invest at least 70% of its net assets in REITs constituted in and/or traded in and/or primarily invested in underlying assets in the Asia Pacific ex-Japan region, each of which is closed-ended and listed on any regulated market. The remaining assets of the sub-fund may be invested in real estate-related securities listed on any regulated market in the Asia Pacific ex-Japan region, closed-ended non-Asia Pacific ex-Japan REITs listed on any regulated market, and cash and cash equivalents.
As on July 31, 2021, the top holdings of Manulife Global Fund – Asia Pacific REIT Fund were Link Real Estate Investment Trust 8.11%, CapitaLand Integrated Commercial Trust 7.73%, Ascendas Real Estate Investment Trust 7.64%, Mapletree Logistics Trust 5.04%, Frasers Logistics & Commercial Trust 4.83%, Mapletree Commercial Trust 4.45%, Mapletree Industrial Trust 3.91%, Fortune Real Estate Investment Trust 3.54%, Frasers Centrepoint Trust 3.50% and Mapletree North Asia Commercial Trust 3.49%.
In terms of sectoral break-up of the underlying fund portfolio, 16% is in industrial, the rest real estate equity REITs (10.4% diversified, 2.75% hotel & resort, 25.85% industrial, 7.52% office, 30.18% retail and 2.79% specialized) etc. Some money was in cash. In terms of country allocation, Australia has 10.69%, China 11.90%, Hong Kong 13.94%, Philippines 1.63%, Singapore 57.63% and Thailand 1.56%.
In terms of performance, Manulife Global Fund â€“ Asia Pacific REIT over 1 year ended July 2021 gave 9.12% return. It does not have a long track record.
Minimum application amount – Rs. 5,000 and in multiples of Re. 1/- thereafter; minimum additional purchase amount Rs. 1,000; SIP allowed
Benchmark – FTSE EPRA Nareit Asia ex Japan REITs Index
Fund options – Direct and Regular
Exit load – 10% of the units allotted shall be redeemed without any exit load, on or before completion of 24 months from the date of allotment of Units. Any redemption in excess of the above limit shall be subject to an exit load of 1% is payable if units are redeemed / switched-out on or before completion of 12 months from the date of allotment of Units and an exit load of 0.5% is payable if Units are redeemed/ switched-out between 12 month to 24 month for the date of allotment of units. There will be no exit load if units are redeemed / switched-out after completion of 24 months from the date of allotment of units.