View more on these topics

Bespoke Financial Consulting tracks new ground

Bespoke Financial Consulting has established a UK commercial property tracker fund.

The Bespoke IPD UK Monthly Index Tracker Fund is linked to the Investment Property Databank UK Monthly Index, which comprises around 3,700 retail, industrial and office properties.

The index was created in 1995 to provide an independent benchmark for the industry. It comprises the value of ‘bricks and mortar’held in balanced and specialist property unit trusts, pooled pension schemes and unit-linked insurance funds, rather than the value of property shares.

The new fund tracks the index by using swap derivatives. This means that as it does not invest directly in properties, it will not be affected by difficulties in finding suitable investment opportunities or of limited liquidity. Active fund managers that invest directly in property may be forced to hold a high proportion in cash while they find and buy investment properties. Physical property also lacks liquidity, which means active managers must also hold cash to pay investors who want to cash in their investment. In a rising market this can reduce returns.

In contrast, investors in the Bespoke fund benefit from full property exposure from day one and daily liquidity is provided, so the fund does not have to own cash.

Income is paid half yearly as interest rather than a dividend payment. This means that if investors do not pay tax or invest through an ISA, all of the tax deducted at source can potentially be reclaimed. The yield is also unaffected by charges, as these are taken from capital. However, this does mean that growth can be constrained.

Despite investors’ recent interest in commercial property markets further afield which offer higher yields than the UK, Bespoke says there will always be interest in the domestic market and believes its fund will be attractive because the yield is paid on the index.

The fund’s initial charge of 5 per cent and annual charge of 1.5 per cent may seem high for a tracker fund. However, Bespoke says a fund of this type, which pays initial and renewal commission to IFAs, will inevitably have higher charges than conventional equity trackers.

Recommended

FundsNetwork forecasts record year for Isa sales

FundsNetwork predicts that 2007 will be a record year for Isas and forecasts a 30 per cent increase in Isa sales through the platform.The company says the Government’s confirmation of its long-term commitment to the savings vehicle and the announcement of new switching freedoms has boosted interest in Isas.Head of FundsNetwork David Dalton-Brown says advisers […]

Polar points to a split sector

Predicting what will happen in the protection market, particularly after such a turbulent year, is never going to be easy but there are some things that we can expect.Despite some experts predicting Prudential’s severity-based insurance model would catch on, there has been little evidence of it so far. Although certain providers are rumoured to be […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com