Type: Authorised property unit trust
Aim: Income and growth by investing directly in a global portfolio of commercial properties
Minimum investment: Lump sum 5,000
Investment split: 53% retail, 19.2% offices, 25.2% industrial, 2.6% other
Isa link: No
Pep transfers: No
Charges: Initial 5%, annual 1.35%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7203 3329
The Swip Property Trust is an authorised property unit trust that has been opened up to the wider retail market with a reduction in the minimum investment to 5,000 from 100,000.
French & Associates managing director Keith French says: “The attraction of property funds over the past few years has lead to surplus cash building up, thereby diluting the returns particularly relevant with life funds. The Swip Property Trust limits the amount held in cash to 10 per cent for liquidity purposes, which should maximise returns.
“Having taken over the Abbey Life fund, this investment offers an established portfolio of 70 properties across the U.K. and across sectors.”
French notes that the fund manager, Gerry Ferguson, has a proven track record and expected returns for 2005 are in the region of 10.5 per cent.
“The Swip Property Trust allows the investor exposure to the commercial property market without the large outlay, commitment and liquidity restrictions normally associated with this asset class,” says French.
With no redemption period and no commercial property share element, French feels this is a flexible vehicle that has the potential to produce steady returns.
He says: “The literature is user friendly and clearly explains the objectives and nature of this investment. Adviser remuneration is as you would expect at 3 per cent initial and 0.5 per cent fund based.
Turning to the less attractive features of the fund, French says: “The ability to invest in US. or continental European real estate is a potential drawback as currency fluctuations could affect the overall returns of the fund. Also how experienced is the fund management team in buying and selling overseas property and what additional costs are involved, if any? How diversified in terms of type and geography will the overseas properties be if the portfolio is concentrated in the UK?”
French scans the market for possible competitors and cites New Star and Norwich Unions authorised property unit trusts. He says: ” Both of these funds, however, have a property share element and do not invest 100 per cent into direct commercial property.
“It is also worth looking at the cash levels of these funds. With the property share element, they are susceptible to the movements of equity markets. As commercial property is a separate asset class often considered as a diversification from equities, then one has to look at this factor in calculating overall asset allocation. The Swip Property Trust since its launch has outperformed both of these funds due to their equity exposure.”
French feels the Swip Property Trust is a very diversified fund which has benefits over the New Star fund in particular, which invests in properties only in London and the South East. He also mentions another fund launched around the same time as the Swip Property Trust the Britannic Property Fund.
“However, that has the right to hold you to a six month redemption period and is a smaller fund,” he concludes.
Suitability to Market: Good
Investment strategy: Good
Adviser remuneration: Average