Understanding risks and rewards
Our skillset is adaptable to unlisted wholesale and direct property investments. As advisers, we not only understand the key drivers for investors but also the structure of risks and rewards which apply to managers. Without such understanding it's impossible to adequately assess competing investment options.
JGS is privileged that many significant fund managers seek our views and advice when they bring wholesale products to market. We also enjoy strong relationships with international investment banks via whom much offshore fund raising is promoted in Australia.
We don't practice as property developers or fund proponents or otherwise assist in capital raising as this might conflict or create a perception of conflict with our responsibility to clients and our philosophy of independent and unambiguous advice.
It's possible to identify property funds in selected countries which have the potential to achieve the net target returns of clients on a properly risk-managed basis. These can provide a diversification benefit and the possibility of returns higher than those likely to be available generally in the current Australian market.
The principal risks we consider for offshore investment and the mitigants that we see, are:
The proper course is investment with locally based managers, not direct ownership.
Appropriate hedging is possible and the cost should not reduce returns below acceptable levels.
There are complications, especially in the USA, however, these are manageable and should not unduly impact returns.
Investments should be restricted to more developed countries with well established legal and political systems.
We give consideration primarily to the manager and the strategy of the manager. Experience particularly through market cycles is a critical determinant of the attractiveness of managers of offshore wholesale opportunities.