Over the course of June 2025, the NAV of the Fund increased by 3.3% (A Acc GBP). Meanwhile, the UK Real Estate Index* increased by 1.2%. Since its launch, the Fund has increased by 6.9% (A Acc GBP), outperforming the UK Real Estate Index* which has fallen by 16.2% in the same period.

The strategy of the Fund is to invest in a diversified portfolio of thematic real assets. The Fund’s 20 investments are set to benefit from four socio-economic mega trends: ageing population (15.9% portfolio weight), digitalisation (29.6% portfolio weight), generation rent (25.2% portfolio weight), and urbanisation (7.3% portfolio weight). It will also invest in REITs with diversified assets that encompass one or more of these trends (19.0% portfolio weight).

Within each mega trend, the fund manager undertakes fundamental research to identify the most attractive investment opportunities. Combining top-down analysis of socio-economic mega trends with bottom-up fundamental research has yielded good results for the Fund.

In June, multi-theme assets had the strongest performance, delivering 3.6%**. Ageing population, digitalisation and urbanisation mega trends also performed positively, delivering 3.2%**, 3.1%** and 2.8%** respectively. Generation rent delivered negative returns, down -0.4%** on the month. This highlights the benefits of running a diversified portfolio.

M&A activity has been a key driver of performance over the last six months, with offers across the portfolio pushing up returns.

Deals were completed on Care REIT and Urban Logistics REIT. The fund manager voted against the Care REIT cash deal as, in his opinion, the price didn’t reflect the true value of the business. In contrast, he voted in favour of the Urban Logistics cash and shares deal because of the potential for the Fund to participate in further upside via LondonMetric (the acquirer). At the time of writing, there are a further four live deals in the Fund. These are for Assura (5.2% portfolio weight), Warehouse REIT (6.1% portfolio weight), Empiric Student Property (5.4% portfolio weight) and PRS REIT (4.0% portfolio weight), plus Life Science REIT (1.8% portfolio weight), which is undergoing a formal sales process. The fund manager has spent a lot of time engaging with the Boards of each company in an attempt to extract the maximum value for each deal, and has also written at length on various M&A topics across the sector.

With the Fund losing Care REIT and Urban Logistics REIT to M&A activity, the fund manager has reallocated capital to other portfolio holdings, as well as adding new positions in Schroder REIT (portfolio weight 3.6%) and Sirius Real Estate (portfolio weight 3.3%). Schroder REIT has a diversified portfolio with a strong bias towards multi-let industrial and retail warehousing. Both sectors have structural tailwinds and are of potential interest to acquirers and consolidators in light of recent M&A activity. Schroder REIT has an attractive dividend yield of c.7%, which has been growing at a high-single digit rate in recent years. The portfolio has reversionary potential of c.20% over the coming years, which should lead to further dividend growth. Sirius Real Estate is another new addition to the Fund. As an owner and operator of branded real estate with a healthy pipeline of investment opportunities and a complimentary fund management business, Sirius represents a good addition to the Fund’s portfolio. Additionally, Sirius’s management has an excellent track record of executing on the business model. Its dividend has grown for 23 consecutive half-yearly periods, and they have the ambition to grow their funds from operations by c.30% over the medium term, which should lead to further dividend growth.

Aside from M&A activity, assets in the portfolio have delivered strong results. Tritax Big Box (portfolio weight 7.3%), an owner of logistics and distribution warehouses across the UK, announced an increase in development and a higher profit guide on the back of UK asset sales. They added £11.6 million of rent on the back of 4.1% annualised growth. Segro (portfolio weight 7.0%), an owner, manager and developer of industrial property, announced an increase of 3.2% in rental value, with new headline commitments of £91 million. LondonMetric (portfolio weight 6.7%), an owner and manager of diversified UK real estate, announced an increase in rent reviews of 17%, with an income uplift over the next two years of £27 million. CEO of LondonMetric, Andrew Jones, said “With ten years of dividend progression under our belt, our all-weather portfolio is more capable than ever of delivering reliable, repetitive and growing income, and we remain firmly on track to achieving dividend aristocracy.”

Following a strong H1, the fund manager remains optimistic about the Fund’s performance in H2 due to the uptick in M&A activity, along with the strong underlying performance of portfolio assets. This further reiterates the positive growth potential of the UK REIT sector. Investors should look to the attractive, growing dividend yield and the potential for further upside. While growth concerns continue to impact capital markets, the four socio-economic mega trends - ageing population, digitalisation, generation rent and urbanisation - are set to gain. There is reason for increased optimism across these mega trends as the Fund continues to invest in defensive, domestic and dependable assets.


*MSCI UK IMI Core Real Estate Net Total Return GBP.
**Defined as the calendar month, as opposed to the valuation month.