Insight Investment has brought out a closed ended fund that invests in a portfolio of 64 UK commercial properties spread over the retail, industrial and office sectors.s
The Insight Foundation Property Trust has an income yield of 6.75 per cent and its initial portfolio is likely to be worth around £293m. The portfolio is made up of an existing portfolio that Insight has managed for Clerical Medical for the past three years and another portfolio for the, Lunar Partnership, which it has managed for almost a year..
The initial portfolio is diversified across regions and sectors, there appears to be a bias towards the south east excluding Central London which is most likely to benefit from the economic recovery.
However, the trust will be actively managed by Insight's property team, which currently manages £4.6bn in property assets, including the Westbury Property Fund and the property element of Clerical Medical with-profits fund. They will look for properties with a diverse spread of tenants and above average income yields.
Property has performed well over last three years and stronger economic growth over next few years may support the commercial property market and lift the office sector, especially as it is likely that vacancy rates have peaked.
Although the investment split between retail, office and industrial sectors is fairly even, slightly more is invested in the retail sector at the outset. Insight believes this area of the market, which performed well last year, will continue to perform strongly into 2005. A possible note of caution is that higher interest rates in the UK could lead to a slowdown in consumer spending which could negatively affect the retail market,
However this fund is not reliant purely on one sector and active management enables the portfolio to be shifted towards whatever sector is thriving in the changing economic environment if this is deemed necessary.