The Sarasin CI global property fund invests predominantly in real estate investment trusts – Reits – in countries such as the US and Australia, but can also invest in closed-ended property funds and listed property companies. Until property investment funds, the UK version of Reits, are introduced, UK exposure will be derived from property companies such as Land Securities.
The fund has a minimum investment of £2,500 or £100 a month and has a bias towards commercial property, with residential property kept to a minimum. It is designed to fill a gap in the market for indirect exposure to a global portfolio of properties through a single fund.
Funds investing directly in property may have high transaction costs and can be difficult for investors to exit due to a lack of liquidity. Sarasin Chiswell chose to focus mainly on Reits because they are liquid and are available in a sufficient number of countries to ensure geographical diversity. Property sectors in different countries develop at different rates throughout the economic cycle so the fund will invest in a sector when advantageous and look to other sectors when conditions change.
Sarasin Chiswell will manage the fund but will draw on the skills of two external advisors. Global surveyor Jones Lang LaSalle will make asset allocation recommendations across regions and property sectors on a quarterly basis. Data will also be provided by 50 property analysts at UBS Investment Research. Current holdings include Australian Reit Westfeld LPT, US Reit and UK property company Land Securities.
This fund is useful for gaining global exposure to property and Reits have more correlation with direct property than listed property shares, which is good for diversification purposes. However, there may still be some correlation to equities so some investors, if they can afford it, may prefer to invest directly in property or the new authorised property unit trusts which can be 100 per cent invested directly in property.