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Nov 7 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has published Petercam Securities Real Estate Europe's (REE), a fund managed by Petercam Institutional Asset Management (Petercam IAM), 'Strong' Fund Quality Rating.
The 'Strong' rating reflects the fund's disciplined investment approach against a customised benchmark. In Fitch's view, the fund's investment edge originates from its investments in under-researched, small to mid-cap holdings, and in markets geographically close to Belgium where Petercam's core expertise lies.
Fund Presentation REE is a UCITS IV-compliant Belgium SICAV with EUR165m of assets as of end-September 2013, investing in European real estate equities. Its objective is to outperform the benchmark on a three-year rolling period, with a tracking error below 4%.
The fund's active, long-term investment approach is primarily based on bottom-up fundamental stock-picking but also incorporates top-down thematic views. The fund is managed against a customised benchmark, the Petercam European Property Shares (PEPS) index. The fund is fully invested, and has a small to mid-cap, quality growth bias. Portfolio construction is anchored to the PEPS benchmark, with limited stock, sector and country deviations. The fund is allowed 30% off-benchmark stocks.
Investment decisions are taken collectively by two portfolio managers (PMs). Stock research is conducted by the PMs, with a focus on qualitative characteristics of company management. An independent investment risk team of six oversees and challenges PMs' decisions, making full use of third-party risk analytics. Petercam IAM has outsourced its middle office and IT functions to Lombard Odier since 2012.
Launched in 1999, the fund has achieved Lipper Leader Consistent Return scores of 3, 4 and 5 over three, five and 10 years respectively. The fund has outperformed its benchmark by 2.4 percentage points over three years with a tracking error of 1.9%, meeting its return objective.
Petercam IAM is wholly owned by Petercam SA, which was founded in 1968 and 70% of the equity is owned by 13 partners. It had EUR13.6bn assets under management as at June 2013, with 4% invested in European real estate equities. The company's historical focus has been in European assets and investors.
The rating may be sensitive to material changes in the investment or operational processes or resources dedicated to the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could result in a downgrade of the rating. For example, this may be manifested in significant structural deterioration in the fund's performance or departure of key investment professionals.
Fitch's Fund Quality Ratings combine Fitch's experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch's Fund Quality Ratings offer an independent, forward-looking assessment of a fund's key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager's investment process, key fund performance drivers, risk management, and the quality of the fund's operational infrastructure.
For more information, please see www.fundmanagement.fitchratings.com
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Link to Fitch Ratings' Report: Petercam Securities Real Estate Europe