Aviva Funds International has expanded its range of Privilege portfolio funds with the introduction of the Prvilege portfolio European property fund.
This Luxemburg-based Sicav invests in the stocks of property management companies rather than investing directly in bricks and mortar. It will hold around 25 stocks across countries and sectors.
The management of the fund has been sub-contracted to Netherlands-based Ohra Asset Management. Raymond Lahaut, who joined Ohra from Insinger de Beaufort in 2001, will run the portfolio. The UK, France and the Netherlands are likely to figure highly in the portfolio, with lesser amounts invested in Finland and Germany.
When selecting stocks, Lahaut will initially take a top-down approach, looking at economic growth, retail sales and consumer spending. He will then look at the property market within each country, examining factors such as void periods across commercial property sectors. Finally, a bottom-up approach is taken to look at individual stocks in terms of management and the level of gearing within the property portfolios they own.
Lahaut currently favours the retail sector because he says consumer spending is strong and retailers are opening up shops across Europe. He is less enthusiastic about the office sector because rents are decreasing while vacancies are rising. This is supported by a recent European Rent Survey conducted by UK property manager Weatheralls, which found that rental growth in prime office space had slowed across Europe.
The fund could suit sophisticated investors and institutions for diversification purposes. Some property funds invest directly in commercial property but can be difficult to get out of, whereas this fund has the advantage of liquidity.