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Henderson’s McQuaker tips property as 2013’s standout investment

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Henderson head of multi-asset Bill McQuaker believes that by the end of the year commercial property will have been one of the standout asset classes of 2013.

McQuaker, until this year, had not held any commercial property since he joined Henderson in 2005 but now has 9.4 per cent in the group’s Core 3 and Core 4 portfolios.

In addition he has 5.8 and 6.1 per cent respectively in the Henderson Multi-Manager Income & Growth and Multi-Manager Distribution funds.

McQuaker is accessing the asset class via the £1bn Henderson UK Property fund which is yielding 4.3 per cent and the £864m Legal & General UK Property Trust, which has an income of 2.8 per cent.

He says: “I believe by the close of 2013 commercial property will have been one of the more positive and fresh stories of the year.

“It is providing a decent income stream and some inflation protection, with the average fund yielding circa 6 per cent according the IPD. We are not anticipating really strong performance in capital growth terms but it does have the potential to make some gains.”

Chelsea Financial Services managing director Darius McDermott believes for those seeking out a lower-risk income stream, where bonds are unattractive and cash is delivering a negative real return, commercial property is certainly a viable option.

He says: “Commercial property valuations appear to have bottomed out and there has even been an uptick. But investors must bear in mind it is an illiquid asset class.”

During the financial crisis UK commercial property endured a horrendous period, as capital values collapsed by more than 44 per cent between June 2007 and July 2009 according to the IPD UK Monthly Index, representing the sharpest decline ever recorded by the barometer.

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