Asset Manager Goes Into 'Gordon Gekko' Mode, Eyes German Property Investment Ideas

• The Eclectica Fund fell 7.1 percent in the month of August
• For now, fund managers believe that the Chinese economy will continue to drive global equity markets
• The fund remains bullish on European equities, particularly within the German residential real estate market

August was a rough month for many global investors, and the Eclectica Fund was no exception. In a new report, fund manager Hugh Hendry discusses how hard the fund was hit and how it is positioned moving forward.

August performance
In August, the Eclectica Fund returned -7.1 percent, although it remains up 2.7 percent so far this year. The biggest blow to the fund in August came from global equity exposure, which produced an overall 7.1 percent decline. European exposure was particularly bad in August.

Current positioning
Despite the weak August, the Eclectica Fund is still heavily positioned in European equities moving forward. In fact, European equities make up nearly half (45 percent) of the fund’s holdings.

China remains key
For the time being, the fund’s managers see China as the primary driver of global equity markets. Unfortunately, until economic data out of China stabilizes, they see little upside to global equity markets.

The German play
According to the report, fund managers are very bullish on the German residential property sector. They see a favorable macroeconomic environment in Europe, falling vacancy rates and a population flow from rural and eastern parts of the country into the larger cities and industrialized parts of North Rhine-Westphalia.

“European monetary policy is now set at a level which is at long last arguably appropriate for the less productive nations such as Spain and Italy but certainly too loose for more productive countries like Germany,” the report reads.

Investors looking to play the German residential real estate market should consider German-listed REITs such as DESIGN Bau AG and Deutsche Wohnen AG.

Disclosure: the author holds no position in the stocks mentioned.