Aim: Growth and income by investing globally in Reits and other property companies
Minimum investment: Lump sum £1,000
Investment split: 30.5% Asia Pacific ex Japan, 29.7% US, 20.1% UK, 10.3% Europe ex UK, 9.4% Japan
Isa link: Yes
Pep transfers: Yes
Charges: Initial up to 5%, annual 1.25%, performance fee 20%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7038 7002
This fund from Sarasin Chiswell uses the greater flexibility provided by Ucits III in relation to global property shares.
Capital Trust Financial Management partner Bruce MacFarlane says: “The investment objective of the fund is to provide a return of 3.5 per cent above the UK Retail Price Index over a three-year period and to generate an income of 2 per cent paid on a quarterly basis. It is therefore fairly transparent from an IFA and client’s perspective in relation to the returns they can expect to receive by investing in the fund.”
Explaining the investment strategy MacFarlane says: “Depending on the manager’s market view, he can further utilise the flexibility permitted by Ucits III legislation to hedge the fund and reduce its volatility by investing in a portfolio of derivatives.”
MacFarlane says the global property market has experienced strong gains over recent years. He thinks the ability to hedge this fund should make it attractive to investors who want to maintain a property exposure in their portfolios with a lower level of volatility.
“The literature for the fund is good, clear and concise and the charges are reasonable. However, the 20 per cent excess performance fee over the benchmark makes the fund more expensive than many of its peers,” says MacFarlane.
Although MacFarlane feels there is little to dislike about the product, he questions the timing of its launch. “It is launched at a time when global property yields are at historic lows and global interest rates appear to be on the rise once more. From a valuation perspective, global property prices would appear expensive n comparison with other asset classes,” he says.
The fund will invest primarily in the shares of Reits and property companies which MacFarlane believeswill not be immune to a downturn in the global property cycle. “As such, while the fund may have a hedging strategy in place, ungeared funds which invest in the physical property may be more defensive during a period of prolonged weakness,” he says.
MacFarlane points out that the number of funds investing in global property as an asset class has grown over recent years, as popularity for a once overlooked asset has surged.
“With most of the better known investment houses providing property offerings, it is likely that they will prove the main competition for this fund,” he says.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average