Quay Global ETFs face scrutiny after major redemptions and uneven results

Unhedged Fund Swings Into Loss

The two Quay Global real estate funds have produced a starkly divided scorecard for the year ended 30 June 2026. Quay Global Real Estate Fund (Unhedged) (ASX:QGF) recorded an operating loss of A$22.852 million, reversing the A$66.064 million operating profit reported a year earlier. Its net assets fell to A$523.484 million from A$680.136 million.

The main drag was the portfolio’s marked-to-market performance. Net losses on financial instruments reached A$37.218 million, comprising A$2.137 million of realised losses and A$35.081 million of unrealised losses. Dividend and distribution income also declined to A$20.008 million from A$24.768 million, while the fund recorded a further A$1.099 million foreign-exchange loss.

Currency Hedging Changes the Result

The AUD Hedged fund moved in the opposite direction, reporting a A$22.991 million operating profit compared with A$20.716 million in FY2025. Its listed investments generated net fair-value losses of A$58.145 million, but that was more than offset by a A$63.142 million foreign-exchange gain under the fund’s newly disclosed hedge-accounting framework.

The hedged fund held A$660.451 million in listed securities at year-end and reported A$11.516 million of forward foreign-exchange contracts as financial liabilities, against A$3.882 million of derivative assets. The accounts record A$47.420 million of gains from hedging instruments, broadly offsetting A$47.600 million of changes in the hedged items, with A$180,000 of hedge ineffectiveness recognised in the result.

ETF Redemptions Reshape Fund Balances

Both funds launched ETFs during the year, renaming their existing relevant classes as Active ETF classes. That transition coincided with heavy redemption activity. The unhedged Active ETF class recorded A$285.432 million of redemptions against A$169.679 million of applications, while the hedged Active ETF recorded A$298.725 million of redemptions against A$297.117 million of applications.

The unit movements were particularly pronounced: the unhedged Active ETF closed with 129.757 million units, down from 481.272 million, while the hedged Active ETF ended with 114.237 million units compared with 692.972 million a year earlier. The filing does not identify the reasons for those flows, but the figures show that the ETF launch year involved a substantial reshaping of the investor base rather than simply incremental distribution growth.

Distributions Rise Despite Uneven Returns

Distributions increased across the Active ETF classes. The unhedged fund paid A$16.826 million, up from A$46.364 million in the prior year only when viewed against the much larger previous final distribution; its per-unit payments were 5.8538 cents in December and 6.5876 cents in June. The hedged fund paid A$17.926 million, more than double the A$8.507 million distributed through its comparable class in FY2025, with 5.5507 cents per unit in December and 9.0889 cents in June.

Deloitte issued unmodified audit opinions on both financial reports. The accounts also include a retrospective change requiring all declared but unpaid distributions to remain recorded as liabilities until settlement, regardless of whether investors ultimately take cash or reinvest. Separately, the responsible entity’s board changed substantially after year-end: Andrew Findlay became chair on 18 September, alongside the appointments of Kieran Rabbitt and Aria Zarei, following several resignations.