Investment philosophy
Colonial First State Global Asset Management believes owning listed property securities (which include listed property trusts and property-related companies) is a good substitute for holding property directly, allowing diversification over various types of properties and geographical areas. Listed property securities also provide far greater liquidity than direct property holdings because of their publicly listed nature and the relatively small size of parcels that can be bought and sold. A major benefit of listed property is therefore the speed and ease with which trends in various property sectors can be exploited through the listed property trust market. Finally, the growth of listed property securities is an investment trend that in itself opens up new vehicles and structures.

We believe that global listed property markets are inefficient. Global property markets are developed and securitised to varying degrees, which leads to inefficiencies in relative valuations between regions.

Style
We believe that markets frequently fail to price real estate securities efficiently. Opportunities to add value arise when discrepancies develop between market prices and our own views of absolute values within our universe. As such, our active investment style looks for undervalued securities using a discounted cash flow analysis as a base. We then perform analysis on individual trusts and companies after satisfying a number of screening criteria outlined below.

Objective
Our aim is to maximise alpha to investors through superior capital and income returns from investment in a broad selection of liquid Australian property investments. Performance after fees is to exceed the total return of the benchmark over rolling three-year periods. Most of the performance is attributable to individual security selection.

Alliance with Colliers International
In November 2004, Colonial First State Global Asset Management formed an exclusive alliance with a leading global real estate services group, Colliers International, to further enhance our property research capacity. This alliance gives us access to real time proprietary information on every major property market globally, allowing us to identify pricing anomalies in the listed market quickly and efficiently.

Investment process
Our investment process is broadly based on three key components:

Research
Macro-economic research with detailed bottom-up research is used to identify the geographic locations or sub-sectors currently benefiting or likely to benefit from strong fundamentals. We then seek to identify high quality companies/trusts which meet our investment and risk parameters.

Stock selection
We select securities that are priced favourably relative to their underlying risk/return prospects and the prospects of other securities in the universe.

Portfolio construction
The relative valuation assessment provides the basis for our buy/sell decisions and the portfolio weightings. We also employ a macro-economic overlay, which is a broader assessment of overall portfolio risks.