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Swip feels 100 per cent

Scottish Widows Investment Partnership has designed a property fund for high-net-worth investors which can invest up to 100 per cent directly in commercial property.

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.

The fund currently has around 70 holdings and will invest mainly in office, retail and warehousing in the UK, although it can invest in Europe and the US. Current tenants of the properties in the portfolio include BHS, Toys R Us and John Lewis.

The fund will be 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 almost 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 will combine a bottom-up assessment of each individual property with a top-down view of the economy. They will 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 will 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, this funds obvious drawback is the 100,000 minimum which puts it way out of reach for the majority of investors.


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