Real estate investment trusts will command much attention ahead of their introduction into the UK market on January 1, 2007. Franklin Templeton and Scottish Widows Investment Partnership have already positioned themselves in the market. But, first, a word about Reits.Advisers are aware of the low correlation benefits of commercial property in balanced portfolios. I see competitive returns coming from commercial property and it is appropriate for clients to consider the benefits of overseas property diversification. Reits offer key advantages, particularly in liquidity terms, over conventional unit trusts and Oeics as they are easily tradable. From the taxation angle, investors effectively pay twice on the income received from conventional funds. However, within a Reit structure, rental income and profits from the sale of assets are free of tax on condition that the fund distributes most of its earnings. It is felt that the introduction of Reits next year in the UK and Germany will transform the sector in Europe and could well become the way for investors to attain exposure to property. I expect many existing property companies to convert to Reit status. The market deserves considerable attention and, just taking one example, Swip is already invested, with around 31m under management. I also expect to see some money diverted into the sector from fixed interest, particularly as interest rate increases cause some concern for fixed interest as an asset class. The industry requires new asset classes, particularly for the income investor, so watch for further new launches to add to the Swip-type funds already on the marketplace.