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Property trusts boosted by post-Brexit gains

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Closed-ended commercial property funds saw gains in the six months following the Brexit vote amid the wave of redemptions faced by the open-ended sector.

Data compiled for Money Marketing by the Association of Investment Companies shows the average total return for the Property Direct UK sector was 17.08 per cent in the six months between the EU referendum in June and December, compared with 5.43 per cent returns for the whole of 2016.

The £1.3bn F&C Commercial Property trust was the best-performing fund in the sector after selling a London property over Christmas to reduce its exposure in the capital.

At the end of December the fund sold the office property, at 25 Great Pulteney Street, for £54.4m, reflecting a net initial yield of 3.95 per cent, according to a note from stockbroker Numis.

Central London exposure in the trust was 36 per cent before it disposed of the property.

December figures show Property Direct UK was the most popular sector for the first time, accounting for 15 per cent of advised investment trust sales via platforms between July and September, worth a total of £179.7m.

The Investment Association Property sector had more than £2bn outflows from June to November 2016 and returned 1.2 per cent over the period.

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Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.

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