Close Property Investment has established the property investment portfolio, an offshore fund of funds that invests in a portfolio of Close property funds.
Investors can choose from a growth portfolio with a target yield of 7.5 per cent a year, or an income portfolio with a target yield of 5 per cent a year.
The growth portfolio is likely to invest around 35 per cent in the capital appreciation trust, which buys and refurbishes retirement flats. The life tenancy of each flat is sold to people in their 70s. Active commercial estates, which buys and makes improvements to office, rental and industrial properties before selling them at a profit, will represent around 20 per cent of the portfolio. Smaller amounts go into the freehold income trust, healthcare and leisure property fund and Close high income properties.
The income portfolio is likely to invest 25 per cent into Close high income properties, which focuses on industrial properties. A smaller amount will go into the healthcare and leisure property fund, which specialises in hotels, care homes, residential and leisure facilities. Around 10 per cent is invested in the ground rent of 45,000 residential properties through the freehold income trust.
Property is currently a popular asset class because it has delivered higher returns than equities with less volatility. Statistics from the Investment Property Databank shows property produced a return of 8.8 per cent between March 2002 and March 2003, while the FTSE All Share produced negative returns of -29.8 per cent.
This fund could suit sophisticated investors who want the diversity of specialist property funds within a single fund. However, the downside is that single property funds can be expensive, but a fund of funds adds to this expense by making charges on top of those of the underlying funds.