Mark Snyderman, fund manager of the Fidelity Real Estate Income Fund, joined REIT.com for a video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.
The Fidelity Real Estate Income Fund invests in the securities of REITs and other real estate companies across the capital stack: common stock, preferred stock, bonds and commercial mortgage-backed securities (CMBS).
“The whole mixture results in something that produces more income than funds that do purely stocks, and it’s a lot less volatile,” Snyderman said. The fund also contains more instruments that are senior and less sensitive to quarterly earnings, “so for investors that want income and something more conservative, it fills a niche,” he added.
In terms of the impact of monetary policy on allocation decisions, Snyderman said he has always invested defensively within an expectation of rising interest rates.
“It’s beginning to look like rates will rise, but I try to construct something where we get a respectable return. I try and be as neutral to it as I can,” Snyderman said.
He added that what has surprised him in the last couple of years is that the common stock portion of the portfolio has been most sensitive to interest rates, while bonds have been less sensitive.
Looking to the second half of the year, Snyderman said he does have concerns about supply levels for property types in select markets.
“I might be quite comfortable doing debt or preferred stock or even CMBS based on these property types where there’s extra supply, but not so much the common stock,” Snyderman said.