View more on these topics

Product matters

Residential investment opportunitieshave been high on IFA wish lists over the past few years but there has been precious little available to satisfy investor demand.

Consequently, most of the money chasing the returns from this asset class has gone down the buy-to-let route.

The bull market in UK house prices is now running out of steam but it is nevertheless interesting to see details of the Black Sea fund, a residential investment fund which will provide exposure to holiday properties in the emerging market of Bulgaria.

On paper, the attractions of the fund are significant. The ability to buy off-plan at an average discount of 50 per cent in a European country that is converging and with an internal rate of return forecast of 41.2 per cent all adds up to a pretty powerful investment story.

Further, a capital protected option with a forecast IRR of 12.2 per cent seems to provide a copper-bottomed way of accessing the potential. F&C is providing the protection at the seventh anniversary.

As for gearing, the effect of the fund buying properties at a discount and with just a 20 per cent deposit at the point of exchanging contracts means it could effectively achieve 10:1 leverage with no bank debt.

This is an extremely high level and explains how the IRR forecast for the unprotected version can be so high. Despite the apparent merits of the offer, this is not a fund that IFAs should be promoting to the average client. It is a specialist investment best suited to wealthy investors who want to add a new angle to their portfolio.

James Dalby is head of investment strategy at Bates Investment Services


Knight rips into Dips

GMAC-RFC executive chairman Stephen Knight has slammed lenders for providing decisions in principle on their websites which stack everything in their favour and against the intermediary.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm