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Insight moves out of M&G property fund

Insight Investment’s diversified target return fund has been forced to sell out of the M&G property fund because its direct property exposure is incompatible with the Ucits III structure.

The M&G fund was an acceptable holding under the diversified target return fund’s previous non-Ucits retail scheme structure but became ineligible when the fund switched to Ucits III. Funds structured under Ucits III are allowed indirect property exposure through property shares but not directly through bricks and mortar.

Insight has filled the gap with the Standard Life Investments property income trust, a Guernsey-based investment trust investing in office, retail and industrial property shares but not in speculative property development.

Insight’s multi-manager team says it is neutral on property in the US and Europe but bullish on Asian property due to the region’s higher yield premiums. This view is reflected in a recent addition to the diversified total return fund – the Japanese Residential Company – and supported by exposure to the Far East in other areas such as private equity.

Co-head of multi-manager Patrick Armstrong says: “We recently bought the Pacific Alliance Asia opportunity fund, which is a private equity fund investing in Greater China and Vietnam. Buying opportunities are opening up because the government is selling assets as the system moves from communism to capitalism. The government is more concerned about people keeping their jobs so is not haggling over price.

“We are also increasing our exposure to India because of inflow into Bric funds, which is pushing prices up.”

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