Viewpoint – Fund time
While writing my real estate section for IFN Guide 2019 at the end of last year, I commented that: “It feels like we should be on the verge of successful fundraising for at least one major fund initiative where quality assets can be owned for the long term, and investors offered some form of liquidity should they wish. Fingers crossed that 2019 is the year that this gets delivered.” Well, I didn’t have to keep those fingers crossed for too long
Manulife Asset Management Services recently launched its Manulife Shariah Global REIT Fund, reportedly the first such fund available to retail investors, which is great to hear.
Digging into the press release, Manulife is planning for some proper diversity with respect to real estate sectors. While the anticipated investments into office, retail, industrial and residential markets are part of the plan, it has also identified the new economy and healthcare as areas of interest. While for the new economy it will be considering the “data centers, telecommunication cell towers and
warehouses” related to such activities, for healthcare it could include “medical centers and retirement homes”.
With respect to geographic diversity, while the US, the UK, Ireland, Spain, Japan, Australia, Singapore, Hong Kong, China and South Korea are all included, some initial focus is suggested with a statement that: “At the moment, we remain optimistic about in the US, Hong Kong and Singapore.” To this, it added that “Shariah REITs have also generated [a] higher total return than conventional REITs”, which it identified as being partly driven by the Shariah screening limiting companies’ debt-to equity ratio to 33%.
I sincerely wish Manulife the best of luck with an innovative offering that I hope gets investor attention. As an industry, we need more such funds to remind ourselves of their potential, for as I also commented at the end of 2018: “The benefits of diversification through fund strategies, perhaps with lower leverage and longer term holds, have not been communicated well to investors. Or better, no one has sought to achieve this on a significant scale yet.” I applaud Manulife for taking the lead.
This article was first published in Islamic Finance news dated 3rd April 2019.