Aim: Income and growth by investing globally in Reits and other property companies
Minimum investment: Lump sum £500, monthly £50
Investment split: 100% in global Reits
Isa link: Yes
Pep transfers: Yes
Charges: Initial 4%, annual 1.5%
Commission: Initial 4%, renewal 0.5%
Tel: 0845 6060062
The Standard Life Global Reit Fund invests globally in Reits and other property-related equities. It will be managed by the company’s investment director Andrew Jackson, who runs Standard Life Investments’ Continental European direct property and listed property funds.
Introducing the fund, Bright Financial Services sales director Paul Breaks says: “Standard Life has launched a global Reits fund which provides a blend of exposure to global listed commercial property assets, predominantly in the form of real estate investment trusts and property-related equities.”
He explains that a Reit is an investment trust that invests exclusively in property and is traded on the stockmarket. “Investing in Reits means investing in a company with the main purpose of owning and managing investment property. This offers a number of key advantages to investors, including an efficient tax structure, the potential for higher yields and protection from inflation.”
Looking at some of the advantages of investing in Reits, Breaks notes that the way Reit legislation has been structured means that most of the rental revenue from managed properties can be passed directly to investors free of corporation tax. “Under most circumstances, Reits may also pass on profits on the sale of assets back to shareholders free of corporation tax,” he says.
In Breaks’ view, Reits have the potential to provide greater returns. He thinks a global property fund increasingly makes sense as part of a client’s overall portfolio and observes that while there is still a strong demand among investors for property exposure, there are concerns over the UK market over heating.
Assessing Standard Life Investment’s credentials Breaks says that fund manager Andrew Jackson who is well-known and experienced with a strong track record. “Standard Life is increasingly being recognised as a quality investment house which, coupled with its strong brand name, offers a comfort factor to clients.”
Breaks points out that the fund’s current geographical split is 20 per cent UK, 22 per cent US, 16 per cent Europe with the balance in Japan, Singapore, Hong Kong and Asia. He adds that it is available for Isa and Pep transfers and that income will be distributed quarterly.
Discussing the charges, he feels the 4 per cent initial charge and annual management charge of 1.5 per cent is not cheap in relation to the wider market for investment trusts.
There is nothing Breaks particularly dislikes about this product but he does have a word of caution about Reits in general for prospective investors. “The point to bear in mind is that Reits correlate more with equities than straightforward bricks and mortar funds. This increases the volatility and clients need to be mindful of this,” he says.
Breaks also points out that overseas property markets are more of an unknown quality than the UK market and clients should not get carried away. “All things considered – the quality of the management, the product and asset diversification – I expect the fund to do well.”
In conclusion Breaks says: “Competition will be provided by other insurers with strong property track records, and fund management groups such as New Star and Schroders.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average