Matt McHardy, PMG Funds’ GM of Investor Relationships shares his thoughts on investing and navigating turbulent times, sharing the growth story of PMG over his seven years with the organisation.
One of the first things you’ll notice about Matt McHardy is his calm, reassuring demeanour. Which certainly helps when financial chat of late has been akin to panic at the disco.
Talking through his role at PMG, it’s clear he’s an expert in his field; easily traversing complexities of the economy, breaking it down to be easily understood and articulating why this topsy turvy period is nothing for investors to fear. In fact, he says that rather than fear a pessimistic outlook we should be preparing for the opportunities that will come with it.
Downturns, he shares, are a natural part of economic cycles.
“New Zealand has had seven recessions over the past 50 years. During those recessions, property and share prices have fallen, but they’ve rebounded every time. Often the fastest gains come during that rebound, but unfortunately, it’s almost impossible to predict exactly when it will happen.
“That’s why good financial advisers are so insistent that you keep investing across a diversified range of asset classes, over the long run. When the market turns, which can happen suddenly, you’re therefore positioned to make the most of a buoyant recovery.”
Excellence drives growth
For evidence, Matt points to the growth of PMG Funds, which he joined in 2015 from BNZ, when the organisation owned only a handful of investment properties and he was its fifth employee.
“PMG was looking to establish what is now its Investor Relationships team to drive the capital raising activities that fund portfolio growth and ultimately offer stronger, more resilient returns to investors.
“Since then, the organisation has continued to mature. We’ve implemented solid governance structures and process, obtained a managed investment scheme licence and developed market-leading investment products for the unlisted property funds sector – all while remaining faithful to a commitment to put our investors and tenants at the centre of everything we do.”
Seven years on, with over $900 million of assets under management and more than 4,000 investors, Matt’s experience and expertise continues to play a huge part in PMG’s success.
“As we move into a new economic environment, it’s crucial that we stay close to our investors, now more than ever. There’s no doubt investor confidence has taken a hit over the last 12 months; but equally we know it’s important for investors to understand where the opportunities are.”
Like most financial experts, Matt is keeping a close eye on economic markers like official cash rates, employment figures, inflation rates and corresponding monetary policy across the globe but he and his team are equally focused on keeping across what is happening in the lives of their investors and tenants. Matt says that PMG’s investment strategy is to be actively investing at all points of the cycle, as by the time values rebound the best opportunities might already be missed.
“Most of our investors understand that property is a tangible asset and performs well over long periods of time, so they are comfortable to keep investing throughout various cycles and back us as an active real estate manager to reliably deliver income and increased value over time.”
“As an organisation, we’re constantly ensuring that our funds are as robust as they can possibly be to deliver regular and sustainable returns to our clients. This means regularly reviewing the portfolio asset allocation, our levels of gearing and our interest rate hedging strategy.”
Looking to the future
When asked what he sees is important for investments over the next six months, Matt says investors should be across small details, which can make all the difference.
“It’s easy to look at return rates on term deposits and think they look attractive at the moment. What investors may miss out on though, and why I believe in the attractiveness of property within a diversified investment portfolio, is that it offers the dual benefits of optimised cash returns through tax efficiencies and depreciation, as well as capital growth, which have historically provided investors with far better total returns over time.”
While the recent cyclone New Zealand experienced may prolong high inflation for longer than anticipated, Matt says there are some interesting positive trends within commercial property that are likely to continue into 2023.
“Premium office space and industrial space in particular continue to be in high demand. These are due respectively to a ‘flight to quality’, with office building tenants seeking premium amenities like end-of-trip facilities – think bike storage and shower facilities – as a means to attract and retain employees; and for industrial, a lack of available space for new development in strategically convenient New Zealand locations which is leading to strong demand for existing well-located facilities and therefore rental growth.
Being both property and fund managers means Matt and the PMG team are able to pass on a full range of property insights to PMG’s investors and our professional partners.
“Our clients are also reassured by the fact that at PMG and our staff are also personally invested in our funds,” says Matt.
“This shows our commitment to what we do and also allows us to share in the success alongside our customers.”