Scottish Widows Investment Partnership property fund manager Gerry Ferguson has a higher than normal cash weighting of 10 per cent, as he will not be rushed into buying poor-value assets.
Ferguson, and Cazenove multi-manager diversity fund manager Mark Harries, speaking on Asset TV, agreed that the explosion in interest in property meant that too many fund managers were chasing properties, which is leading to some making rash purchases.
Ferguson said that he has benefited from exposure to multi-let retail parks and is currently increasing the fund’s weighting in London commercial property, as he expects increased demand primarily on the back of the growth in financial services companies in the City.
Harries said his fund currently has a 7 per cent weighting in property and he will maintain exposure to the asset class, although he is cautious on the outlook of sine sub-sectors.
Ferguson said his fund should deliver an annual return of between 6 and 7 per cent over the next two years.
Harries said: “We like property because of its uncorrelated returns with the stockmarket because we are a diversified fund. We just want to avoid dangerous asset allocations in areas that we think will blow up.”