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Property funds come top as WP alternative

Many IFAs will be advising their clients to invest in property funds after being scared off selling with-profits funds by the current negative publicity surrounding the products.

The poll reveals that 153 advisers said they did not think that the next generation of with-profits products would be an improvement on the current model and when asked where they would place their clients&#39 money instead, property came out as favourite.

Property funds were chosen by 46 per cent of the 153 advisers while in joint second place were either guaranteed or smooth managed mutual funds, with 42 per cent each.

Fourth choice with 41 per cent were funds of funds or managers of managers. Next on 34 per cent were mutual funds in general and 31 per cent said a portfolio of mutual funds, with 20 per cent choosing a structured product.

Standard Life senior technical manager John Lawson says “With-profits became popular because they were seen as a less risky route into investment than through equities.

“I think property is quite a popular alternative at the moment, only because returns have been high for the last few years. The real runners are retail funds. But these will be badly affected by a drop in the rental market. If properties remain unlet, then the price of the funds could be very volatile.”

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