Pinder Fry & Benjamin is targeting small self-administered schemes (SSASs) and self-invested personal pensions (Sipps) with the introduction o the Gold 5 property income portfolio.
This exempt unit trust aims to provide income of 8.2 per cent during the first year, rising to 9.3 per cent a year from year two. It will provide the potential for capital growth after an investment term of between seven and nine years.
Retail investors will coinvest alongside institutional investors in a portfolio of 22 commercial properties across the UK. Retail investors are unlikely to have as much to invest as institutions, so this provides a way of diversifying across more properties than would otherwise be possible.
The trust will invest in the property portfolio of an underlying investment, ING UK property income. No single property accounts for more than 15 per cent of rental income.
The property manager will look for properties that are likely to yield more than 7 per cent a year and will rebalance the existing portfolio through new additions. The revised portfolio will have less exposure to the South east and less exposure to the office sector.
Investment Property Databank figures show returns from the retail sector rose from 5.5 per cent in 2001 to 14.1 per cent in 2002. Industrial property returns rose by 2.5 per cent to 10.8 per cent and office sector returns fell by 4.3 per cent over the same period.
Gold 5 property income portfolio may attract Sipp and SSAS investors who are looking for an income-producing investment. However, investors would need to be aware that the target yields are not guaranteed. The Financial Services Authority is already looking into commercial property investing by retail investors because it is concerned that some investors see the high returns relative to equities and invest without understanding the risks.