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Investment Strategy

The fund’s strategy is to find high quality but undervalued property companies that capture the underlying returns of global real estate investment. SKAGEN m2 provides an attractive alternative to investing directly in property by offering comparable returns but with higher liquidity.

M2 is expected to generate long-term returns in the range between conventional equities and bonds through the application of a total return strategy to create value for unitholders. Alongside capital appreciation, the portfolio manager believes that the compounding effect of reinvesting retained earnings is a key driver of real estate's attractive returns over time. The fund also creates value by exploiting special situations, such as capital management initiatives, M&A activity, shareholder activist campaigns, macro distortions and restructuring or asset rotation opportunities.

SKAGEN m2 is benchmark agnostic; the portfolio manager has complete freedom to invest with conviction away from the index to find value and deliver attractive long-term risk-adjusted returns. Holdings typically have an embedded growth model (e.g. properties undergoing refurbishment, repositioning and / or development), combined with fixed cash flow-generating assets.

The portfolio manager supplements bottom-up research with top-down analysis to exploit the cyclical nature of real estate markets by positioning the portfolio where geographic and sub-sector tailwinds are strongest. The fund also seeks to exploit investment opportunities created by structural changes in demographics, consumption patterns and sustainability. The ideal investment for SKAGEN m2 is a company positioned to exploit the long-term mega trends driving property markets, such as urbanisation, growing middle-class affluence and the rise of e-commerce, combined with attractive fundamentals and valuation.

Portfolio Characteristics

The high conviction portfolio typically consists of 25 to 35 companies with the top 10 holdings representing 45-55 percent of assets. The fund's unconstrained global mandate is exploited to create a portfolio diversified by geography, category, value drivers and economic sensitivity.

M2's investment horizon is typically two to four years but can be longer as the portfolio manager attaches greater value to fundamentals than short-term trends.

Read the investment strategy PDF for SKAGEN m2

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Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on market developments, the fund manager's skill, the fund's risk profile and management fees. The return may become negative as a result of negative price developments.