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Quay mid-month update

With markets moving quickly, we want to keep our investors up to date with how we are managing risk and our broader thoughts around the portfolio.

Quay Global Investors Insights

Recent market movements have been indiscriminate, and price movements violent. In the long term, we believe current prices will offer the opportunity for some very attractive returns. In the short term, however, we don’t know when the volatility will end nor how serious the impact to global economies will be. Hence our immediate focus is avoiding entities where long-term losses will be greatest.

When designing the Quay Global Real Estate Fund back in 2013, the scars of the GFC were still fresh and risk management was front of mind. As a result we decided to structure the fund as unhedged; allow ourselves to be relatively unconstrained in portfolio construction; and have an upper holding limit of 20% cash. All these features – combined with our own research and analysis – allow us to position ourselves relatively defensively.

We also continue to assess the risks within the portfolio. While current pricing for many listed real estate companies may reflect attractive long-term total returns, if companies are forced to sell assets or recapitalise at a low share price then losses are ‘locked in’ and future returns diluted. This is why we are focused, among other things, on balance sheet strength and liquidity.

Separately, two weeks ago we took the view that real estate that relies on people communing or services the ageing demographic could be higher risk considering the virus outbreak. In light of that, we reduced or exited some of our holdings in senior housing and student accommodation, decreased our exposure to retail, and increased our cash balance to greater than 15% (almost entirely in unhedged US dollars). While this has helped minimise the losses to some extent, on reflection we could have been more aggressive with this decision.

As at 19 March 2020 the Fund has experienced an approximate –17.7% quarter to date return, which compares to losses of –25.8% for the Global Real Estate Index[i]. While these numbers are changing quickly, and are personally disappointing, we remain vigilant and continue to monitor the portfolio closely and act in what we believe are our investors’ best interests.



This information is issued by Bennelong Funds Management Ltd (ABN 39 111 214 085, AFSL 296806) (BFML) in relation to the Quay Global Real Estate Fund. The Fund is managed by Quay Global Investors, a Bennelong boutique. This is general information only, and does not constitute financial, tax or legal advice or an offer or solicitation to subscribe for units in any fund of which BFML is the Trustee or Responsible Entity (Bennelong Fund). This information has been prepared without taking account of your objectives, financial situation or needs. Before acting on the information or deciding whether to acquire or hold a product, you should consider the appropriateness of the information based on your own objectives, financial situation or needs or consult a professional adviser. You should also consider the relevant Information Memorandum (IM) and or Product Disclosure Statement (PDS) which is available on the BFML website,, or by phoning 1800 895 388 (AU) or 0800 442 304 (NZ). BFML may receive management and or performance fees from the Bennelong Funds, details of which are also set out in the current IM and or PDS. BFML and the Bennelong Funds, their affiliates and associates accept no liability for any inaccurate, incomplete or omitted information of any kind or any losses caused by using this information. All investments carry risks. There can be no assurance that any Bennelong Fund will achieve its targeted rate of return and no guarantee against loss resulting from an investment in any Bennelong Fund. Past fund performance is not indicative of future performance. Information is current as at 20 March 2020. Quay Global Investors Pty Ltd (ABN 98 163 911 859) is a Corporate Authorised Representative of BFML.

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