During the recent quarter, U.S. stock markets achieved unprecedented highs, responding positively to the Federal Reserve's decision to lower interest rates by 25 basis points in September. This favorable market environment contributed to varying returns across investment vehicles.
The Fund recorded a return of 3.55%, slightly underperforming the FTSE Nareit Equity REITs Index, which posted a 4.77% gain. A significant development during this period was the noticeable improvement in financing conditions for Real Estate Investment Trusts (REITs). Many REITs capitalized on the reduced base rates by engaging in bond market activities to secure funding. In a strategic move, the Fund decided to exit its position in an office landlord, citing concerns over potential earnings growth risks associated with funding substantial upcoming development projects. Looking ahead, the investment team is actively seeking opportunities to acquire shares in high-quality businesses that, despite their inherent value, may have been overlooked during the recent market surge characterized by increased risk appetite.
The market's dynamic nature, influenced by central bank policies and investor sentiment, creates both challenges and opportunities. By diligently adjusting portfolio allocations and identifying undervalued assets, investors can navigate these fluctuations and position themselves for long-term success. The commitment to seeking out robust companies that have been unfairly neglected by the broader market underscores a forward-thinking approach aimed at uncovering intrinsic value and fostering sustained growth.