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Skandia asks the experts

Skandia Investment Management has brought out a global property fund which will be managed by property investment specialist La Salle Investment Management.

La Salle Investment Management is a member of the Jones Lang La Salle group which has been advising on property portfolios since 1978. A team of more than 170 researchers in 36 countries on the investment management side is supported by approximately 9,600 Jones Lang LaSalle employees in more than 100 global markets.

The Skandia global property securities (La Salle) fund aims for growth and income by investing in a geographically diverse portfolio of property-related shares, including real estate investment trusts. La Salle will focus on property-related shares issued by companies which generate rental income.

The fund will invest across residential, industrial, office, retail and the hotel sector. The US will initially dominate the portfolio at a weighting of almost 68 per cent and smaller amounts will be invested in Asia, Europe and the UK.

The majority of the portfolio will be invested in Reits, which were founded in the US in the 1960s. They are now available in 10 countries. with a number of others, including the UK, preparing to offer them. The structure of Reits is tax efficient for the provider if the majority of income is distributed as dividends. Although investors do not benefit directly from this tax efficiency, it may enable Reits to offer a more attractive level of income relative to other assets which would benefit investors.

Most property funds in the UK invest in UK commercial property and this fund offers diversification away from this, as well as having a low correlation to bonds and equities. Property shares are influenced by both property and equity markets, which means although they are less volatile than equities, at times they may have more in common with equity markets than the underlying property markets.

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