The fund is an authorised property unit trust established under the new collective investment scheme sourcebook published by the FSA in March. This created a new group of non-Ucits funds, including authorised property unit trusts. Under the old regulations, the maximum that property unit trusts could invest directly in property was 80 per cent but this fund can invest up to 100 per cent.
The fund invests mainly in office, retail and warehousing in the UK, although it can invest in Europe and the US. Top 10 holdings include the B&Q store in Cambridge and the Great Northern Retail Park in Huddersfield.
The fund is managed by Swip investment director, property Gerry Ferguson and Swips team of 28 property specialists, who have an average of 14 years industry experience. Ferguson has 30 years experience in the property market and joined Swip in 2000. He previously spent four years with RREEF, a large property fund manager in the UK.
When selecting properties for the portfolio Ferguson and his team combine a bottom-up assessment of each individual property with a top-down view of the economy. They consider whether the properties are appropriately priced, the prospects for the sector, Swips house view of the property market and will look at ways to add value to the property such as new lettings and refurbishment.
The team then bid for any properties that appear to be suitable. Once a property is bought, a business plan is drawn up which lists the various opportunities, risks and other factors to help in the continual monitoring of the properties.
The ability to invest 100 per cent directly in property is an advantage as funds which are restricted to 80 per cent may invest in property shares showing a higher correlation to equities than the property market. However, some IFAs may be concerned about a possible price correction in the commercial property sector.