Morley Fund Management has created the Morley high income property unit trust, which aims to produce a gross yield of 6 per cent a year by investing in a mix of property, property-related corporate bonds and UK gilts.
Around 75 per cent of the portfolio will be invested directly in property, with 20 per cent going into bonds and the remainder in cash. Geraldine Davies, who currently manages the Norwich property trust, will act as lead fund manager. She will be assisted by Morley's corporate bond team which is headed by Paul Mingay.
On the direct property side, the fund will hold around 12 to 13 commercial properties across industrial and retail sectors, with a small amount going into the office sector. A large team of in-house researchers will assist Davies in the selection of properties. They will look at the value of the properties, rental yield and the potential returns that could be provided to investors.
On the bond side, Mingay and his team will analyse balance sheets, credit ratings and income yields of property-related corporate bonds issued by companies such as Land Securities, Broadgate Estates and Canary Wharf.
The mix of property and bonds could provide a good mix in the current climate as part of a portfolio for clients who are looking for medium to low risks. However, the minimum investment of £10,000 is quite high and IFAs see the fact that it is not available within an Isa as a drawback.
According to Standard & Poor's, the Norwich property trust is ranked 2 out of 3 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to February 7, 2003.