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Scepticism over fund’s 40% claims

Predictions of a 41 per cent return on a new fund investing in Bulgarian property have been greeted cautiously by IFAs.

The Black Sea property fund from Development Capital Management will invest in early-stage residential property developments in seaside and ski resorts.

Investors can choose between property shares, which will have full exposure to the market, and capital-protected units, which provide 100 per cent capital protection and are managed by F&C Management. Minimum investment is £30,000.

Jersey-registered DCM predicts a return of 12.2 per cent a year on the capital protected units and 41.2 per cent a year on the property shares.

Property prices have risen strongly in Bulgaria in recent years and the World Tourism Organisation predicts a rise in Bulgarian tourism from four million today to 12 million by 2020, says DCM.

But IFAs are stressing that the Black Sea property fund is not a passport to easy money.

Bestinvest business development manager Justin Modray says: “If the fund does manage to deliver, investors in the property shares will probably have a wide smile on their faces. If not, they could lose their shirts. The capital protected units offer a safer route although potential returns, if the fund is a success, are more pedestrian.”

Hargreaves Lansdown senior analyst Meera Patel says: “The fund has very high risk attached because it is wholly dependent on Bulgarian tourism.

“If a client wanted something racy and spicy, there is potential here, but it is like betting on a horse.”

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