M&G's Jane boosts property exposure
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M&G head of equities investment David Jane has increased his exposure to the property sector, claiming that it has been overlooked in the recent market bounce.
Jane has boosted property exposure in both his £138m cautious managed multi-asset and £656m managed funds from about 2 per cent to 8 per cent and says weighting is likely to reach double figures before the end of the year.
UK commercial property produced its first positive month in two years in August while yields of 8 per cent are at their highest in over 20 years.
Jane has raised his exposure through the addition of the £676m M&G property portfolio, managed by Fiona Rowley.
He says: “In the past few months, we have seen equities up by almost 50 per cent and corporate bonds up in the region of 25 per cent but property valuations have not noticed that things have recovered and that is something that has to change.
“The nature of the asset class is that it is slower moving and I believe that it has a long way to catch up.”
But Architas multi-manager chief investment officer Richard Philbin warns that the recent upsurge in interest in commercial property is a case of bandwagon jumping.
He says: “Just because we have seen a snap back in the other markets does not mean that we will see it in commercial property because it bangs a different drum.
“Depending on whether you look at retail, industrial or office space, they all have their own mini-cycles and they all have good and not so good times.
“For commercial property as bricks and mortar, it is probably a good time to be reducing your underweight if you are underweight but it is certainly not a raging buy and not a screaming overweight.”
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