The supply of ground rents was fairly limited until recently, so Close Brothers did not market the fund actively.However, an exceptionally large number of flats are now being built and the supply of ground rents has been boosted significantly. Most of these are on 125-year leases. Ground rents may rise when there are rent reviews, lessees require lease extensions or a change of use to existing leases. This fund may also offer to sell a freehold interest to the lessee, which will typically generate a much higher sum than was paid initially to acquire the asset. Actual returns from the fund are likely to be lower over the long term than investing purely in commercial property but are much less volatile. The fund has generated a total return of around 23 per cent since 2003 compared with 14 per cent for the average bond fund and the average return on gilts of around 15 per cent, as measured by the FTSE All Stocks Gilts index. Gilts are also likely to prove more volatile than the Freehold income trust unless held to maturity. The fund has a 13-year track record and has averaged annual returns of 8.6 per cent per cent. However, current low interest rates mean that the total annual return is likely to be around 6 to 8 per cent including income of 4.25 per cent. In today’s uncertain markets, I believe that this fund is a better bet for the conservative investor than investing in gilts or corporate bonds.
The affordable housing crisis is worsening by 165 homes a day, says a survey from home warranty provider Premier Guarantee. Although the number of homes being built increased by 17 per cent in the first quarter of the year compared with the same period last year, 70 per cent of all homes built cost more […]
Following on from last week’s ‘Money isn’t everything’ speech from David Cameron Shadow Chancellor George Osborne moved further away from traditional perceptions of the Tory Party telling the BBC the next Conservative manifesto will not pledge tax cuts.
Advice has been ruled out of the national personal accounts scheme, echoing Lord Adair Turner’s plans. Work and Pensions Secretary John Hutton’s plan for personal accounts outlined in the White Paper will follow one of two routes which both remove advice to cut costs drastically and allow for a “light-touch, risk-based and proportionate” regulatory regime. […]
The 5 per cent fall in stockmarkets increased pension scheme deficits by £20bn over May 2006 according to Aon Consulting.But despite these falls, pension scheme funds are on average, better funded than at the start of the year. This is because bond yields are still higher than as at the start of the year. Corporate […]
Much has been theorised about the Lifetime Isa since it was announced. The question is, will Lisa be beneficial to savers or not? Read more
- Top trends
News and expert analysis straight to your inboxSign up
Latest from Money Marketing
There is no chance the FCA will let the issue rest but any policy decisions need to be informed by facts, not rhetoric
Robo-adviser Scalable Capital has moved into offering full financial advice. The Europe-wide firm will charge a fixed £200 fee if an investor decides to progress beyond an initial free session. According to Scalable Capital’s website the advice session can either take place over the phone or in person, and investors will get a full suitability […]
Typical transfer values for defined benefit scheme members remained high during 2017, ending the year at £236,000, according to Xafinity’s latest date. This was little changed from the end of 2016 when the figure was £234,000 the Xafinity Transfer Value Index shows. However there was some volatility over the year as the difference between the […]