Why we own both listed and unlisted property investments and things we found interesting

All our Funds delivered positive returns last month. Fund reports are available below.

The August reporting season was generally better than expected. The ASX200 Index increased 1.5%, lagging the ASX Small Ords which was up 5.2%. The ASX Small Ords was powered by resource stocks which roared back on an improved gold price.

The dominant themes of the month were in fixed income. Bond rates rose, both locally and globally, as investors increased the probability of near-term interest rate rises to bring inflation back into the target range. In private credit, we saw the collapse of Bathla Group and several funds halt or limit redemptions in response to market conditions. We’ve provided detailed commentary on these issues in our Affluence Income Trust monthly report.  In other news this month, we explain why we own both listed and unlisted property investments, look at the costs of sending stuff into space and explain why your credit card benefits are likely to be scaled back from next month.

Should you wish to invest in any of our funds this month, head to the Invest Now page on our website to apply online or download paper forms. See below for the calendar of cut-off dates for this month. Applications received by the cut-off dates will be effective from 1 October.

As always, thanks for reading. If you have any questions or feedback, reply to this email or give us a call.

Regards,

Daryl, Greg and the Affluence Team.

Affluence Funds Returns

Affluence Investment Fund

Our flagship Fund is highly diversified and can invest across all asset classes. The portfolio includes an allocation to each of our other funds, plus over 20 different underlying managers and other investments selected by Affluence. The strategy seeks a balance between maximising returns, delivering monthly income and lowering volatility.

Affluence Income Trust

This Fund provides access to a highly diversified fixed income portfolio, targeting monthly distributions and preservation of capital over rolling 3 year periods.

Affluence LIC Fund

This Fund provides access to a specialised strategy that invests in a diversified portfolio of 20 to 35 ASX Listed Investment Companies (LICs) and other discount capture opportunities.

The Fund aims to deliver quarterly distributions of at least 5% per annum, and to outperform the ASX 200 Accumulation Index over time.  

Affluence Small Company Fund

The Fund provides access to ASX Small Companies via a portfolio comprising direct investments, plus selected holdings in smaller LICs and unlisted funds focused on smaller companies.

The Fund is available only to Eligible Investors and aims to deliver quarterly distributions of at least 5% per annum, and to outperform the ASX Small Ordinaries Accumulation Index over time.

Application and Withdrawals

To make a new investment, add to your existing investment or arrange a withdrawal from any of our Funds, head to our Invest page. There you can apply online or download paper forms.

Cut-off dates for September 2026 Applications and Withdrawals this month are shown below.

Fund In Focus

Affluence Investment Fund

The Affluence Investment Fund is our all-weather fund, bringing together our best ideas across all asset classes. It has been quietly delivering results for over eleven years.  

It is managed with the mindset of a family office or endowment fund. It seeks to achieve above average medium and long-term returns while paying monthly distributions and reducing risk using diversification and other strategies.

Our investment mandate for the Fund is very wide. We combine a variable allocation to our three specialist funds, with a range of our best investment ideas across all asset classes. The result is an all-weather portfolio that can deliver in differing market conditions, including:  

• A blend of defensive and growth assets, with a strong value bias.  
• A focus on differentiated investment strategies.  
• Access to over 30 underlying managers and thousands of underlying investments.  

We aim for the portfolio to be highly diversified by asset class, underlying manager, investment strategy, geography, liquidity, and investment structure. 

We believe that to achieve better than average returns, you need to invest differently. We believe that value investing works best in the long run. We believe that being aware of long term cycles can significantly improve performance. And we believe that success requires a long term focus, which in turn requires patience and discipline. 

If you share those beliefs, the Fund may be suitable for you. 

The Fund is designed to be used as a Core or Satellite Component of an investment portfolio for those investors seeking Capital Growth and Income Distributions with a Medium or longer investment timeframe, at least a Medium risk/return profile and needing access to capital Monthly or less often. 

You can learn more about the Fund from the Fund Page on our website which you can access by clicking below. Let us know if you would like us to call you to discuss the Fund in more detail.

Why we own both Listed and Unlisted Property Investments

The reason that our Affluence Investment Fund can invest in both listed REITs and unlisted property funds is best demonstrated by this chart, showing US REIT prices vs underlying net asset value over the last 30 years.  

At various times, US REITs have traded well above and below their asset values. This means that sometimes, it’s better to own listed REITs than unlisted property. And sometimes it’s not. 

Data for Australia is available, but it is unhelpfully skewed by our largest REIT, Goodman Group, which comprises a massive 38% of the A-REIT index. Goodman is really a property developer in disguise and currently trades at around a 120% premium to its net asset value. 

Right now, the Affluence Investment Fund holds around 12% of its portfolio in listed and unlisted property investments. The unlisted investments comprise around half that figure, with the biggest investments being stakes in large shopping centres in Brisbane and Adelaide. This part of the portfolio provides regular income with reasonably stable asset values. 

The other half of the property allocation is a portfolio of ASX listed REITs, including diversified exposure to data centres, offices, hospitals, service stations, US residential and agriculture. The income is slightly lower, but the average discount to net asset value for these listed REITs is above 30%. They are more volatile, but give us the opportunity to benefit from any improvements in share price if discounts narrow.

Things we found interesting

Chart of the month

Getting into space used to require an enormous rocket and a pile of money that only Governments could afford to waste. This chart shows how much that cost has reduced since the 1960’s. It compares the estimated cost of launching a kilogram of payload into low Earth orbit, measured in 2021 US dollars.  

The Space Shuttle cost roughly US$60,000 per kg. SpaceX’s first ship, Falcon 1 cost close to US$20,000 per kg. The most recent ships, Falcon 9 and Falcon Heavy, cost approximately US$3,000 and US$1,500 respectively. 

Cheaper launches change what is possible. We can deploy more satellites, replace them more often, or test a service without committing nearly as much capital up front. Satellite internet such as Starlink is the most visible example, but improved Earth observation, communications and research may also benefit. Many ideas that currently look uneconomic could become viable if the cost of getting stuff into orbit falls. 

SpaceX deserves considerable credit for this shift. Its reusable rockets have helped bring down launch costs, while also giving the company a way to deploy its own Starlink network. That combination could be powerful. SpaceX creates demand for its own launches and then can use its launch capability to provide a service to others. 

But much higher demand might attract competitors. Some of the profits will flow to SpaceX customers rather than the launch provider. What’s possible in space is definitely becoming more exciting. But that doesn’t mean the SpaceX valuation can remain astronomical.

Your morning coffee might be about to get cheaper

The café’s menu board says your coffee will cost $5. But when you tap your card, the machine says $5.08. It’s hardly a financial catastrophe, but it is annoying. If that sounds familiar, we have some good news for you…sort of. 

From 1 October 2026, card surcharges will disappear for eftpos, Visa and Mastercard payments. The Reserve Bank of Australia (RBA) has changed its rules, and card networks have decided to stop businesses adding a separate fee because you paid with one of their cards. 

Does that mean the eight cents has vanished? Sadly not. Businesses will still pay to accept cards, although some of those costs should fall because the RBA is lowering certain fees within the card payment system. The question is whether businesses absorb the remaining cost or increase their advertised prices to cover it. Our guess is that many small businesses, already dealing with rising costs, will put at least some of it into their prices. They can still offer a cash discount, although handling cash has costs of its own. 

There’s another associated change that might impact you – credit card benefits. The existing card fees help fund perks such as frequent flyer points. With those fees being cut, many issuers are scaling back rewards programs, increasing annual card fees and reducing complimentary travel insurance benefits. It might pay to check with your credit card issuer to see what, if anything, is changing for you. 

Vaguely interesting facts.

Astound your friends with these morsels of knowledge:

• Australia’s hundreds of thousands of feral camels mean we probably have more than Egypt. 
• Long before it became famous for mobile phones, Nokia made rubber boots. 
• On average, fingernails grow more than twice as fast as toenails. 
• The hashtag symbol (#) is technically called an octothorpe. 
• The earliest recorded personal name is Kushim. *

* You might think Kushim was a mighty king, a celebrated warrior or a master pyramid builder. Instead, it seems the earliest recorded name belonged to a stock controller keeping track of beer ingredients.  

Early written records were often practical tools for tracking grain, livestock, deliveries and debts. Around 3100 BC, in the Mesopotamian city of Uruk, Kushim was apparently responsible for recording barley transactions associated with a temple brewery. The name appears on a series of 18 tablets that were essentially ancient stock-control reports.  

Unfortunately, we know nothing else about Kushim. We don’t know what he or she looked like, whether they enjoyed their work or whether they ever sampled the brewery’s output. Another of life’s great mysteries. 

Thanks for reading. If you enjoyed this newsletter, forward it to a friend. If you are that friend, you can subscribe below.