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Gartmore moves to European property

Gartmore has diversified the commercial property exposure within its multi-manager balanced and cautious funds by investing in Europe but has stopped short of further diversification through hedge funds and private equity.

The company has bought into the M&G European property fund as it believes strong growth in continental Europe will have a positive impact on bricks and mortar. It has also reduced its UK commercial property exposure to around 9 per cent from 12 per cent but will not sell out of the asset class completely despite concerns from some commentators about a market bubble.

According to Gartmore, UK commercial property has enjoyed a 20-year bull run but demand is strong and it believes there is still value to be had.

The multi-manager team is still bearish on fixed interest and has been underweight in this asset class for some time because the downside potential outweighs the upside. It says part of the allocation it would have otherwise made to fixed interest has gone into commercial property.

Gartmore’s five multi-manager funds are structured as non-Ucits retail schemes able to invest in alternative asset classes such as hedge funds and private equity but the multi-manager team prefer equities, property, cash and bonds.

Deputy head of multi-manager Marcus Brookes says: “We can invest in hedge funds and private equity but we would not do it unless we could make clients money. We would prefer to invest in these asset classes through investment trusts because we are not prepared to hold something where returns are diminished by costs.

“We added the M&G European property fund because the European story is strong and anyone would struggle to say it is overvalued. You could argue that things that are cheap are not very good but we think the catalyst for the property market is the uptake in European growth, with a lot of businesses expanding.”

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