Fund Performance Factsheet – December 2018
We’ve published the latest factsheets for the fund, and they can be downloaded from the link below.
In an environment of significant market and political turbulence, the fund continued to deliver positive absolute returns over the last quarter of 2018.
Property transaction volumes across the UK remained subdued compared to historic averages, as many buyers and sellers are taking a “wait and see” approach. Despite that, our benchmark provider LSL Acadata reported the fifth month in a row of rising prices. Furthermore, regional variations continue to prevail – two thirds of local authorities reported annual growth, the strongest regions being the Midlands, Wales and the North West, reporting average annual price changes between 2.7 to 3.6%. Greater London continues to show the weakest results. The fund does not hold any properties in Prime London, and has added properties earlier this year in the Midlands with an acquisition of a cluster of homes in Nottingham.
In addition, rental income continues to prove a valuable source of return and we currently have an Occupancy ratio of just under 95% (in % of income). Rental income is strongly linked to wage growth, and employment in the UK remains strong.
Looking ahead, forecasts from the Treasury’s December consensus survey point to continuing house price growth of 2.1% nationally for 2019. None of the 15 forecasters in the survey is predicting an overall decline, consistent with the fact that none is anticipating a recession. One factor remains consistent, and that is the continuing shortage of good quality housing in many locations. Figures from the NHBC show that housing starts and completions remain stuck at around 10,000 a month. The social housing sector is delivering around 3,000 per month, but the combined annual total of 150,000 falls well short of the Government’s assessment of a need of between 250,000 and 300,000.
Also, typically, uncertainty fuels rental demand. This seems to be happening, but at the same time the supply of rented accommodation has been hit by a series of tax changes causing many small private landlords to retreat from the sector. This has created local supply shortages, which we expect to translate into rental growth. The RICS forecasts annualised rental growth of 3.1% over the next five years, whilst price growth projections stand at 2.3% on the same basis.
Third-party platforms will have different classes available. A selection of platforms and the available classes are shown below, but please contact us if the online platform you use is not shown.
Please note that Hearthstone is not able to provide financial advice, and the information on this page should not be taken as advice to invest in the fund, or as to the suitability of the fund, a specific share class, or platform for your personal circumstances.
Halifax Share Dealing, Tilney Bestinvest, Charles Stanley Direct, iWeb:
Hargreaves Lansdown (telephone/postal dealing only), Interactive Investor, Alliance Trust Savings, AJ Bell Youinvest:
> For pension/SIPP and ISA only: Class C (ISIN code GB00B95VYK84)
> For General Investment Account, pension/SIPP or ISA: Class D (ISIN code GB00B9608795)
Investing involves risk. Investors should be aware that the value of an investment and the income from it can fall as well as rise, and they may not receive back the full amount they invest. Past performance is not a reliable indicator of future results.
The Authorised Fund Manager is Thesis Unit Trust Management Limited, Exchange Building, St John’s Street, Chichester, West Sussex, PO19 1UP. Authorised and regulated by the Financial Conduct Authority.
Hearthstone Investments PLC is the parent company of the Hearthstone Investments Group. Regulated business is carried out by Hearthstone Asset Management Limited. Hearthstone Asset Management Limited is an appointed representative of Thesis Asset Management Limited which is authorised and regulated by the Financial Conduct Authority (114354).