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Thames property fund spans Europe

Thames River Capital

Property Growth & Income Fund

Type: Offshore Oeic

Aim: Growth and income by investing in UK commercial property and European property shares

Minimum investment: Lump sum £5,000, euros 7,500

Investment split: 50% UK commercial property, 50% European property shares

Place of registration: Guernsey

Charges: Annual 1.5%, performance fee 15%

Commission: Subject to negotiation

Tel: 020 73601200

Thames River Capital’s growth & income property fund is an offshore Oeic which invests in a portfolio of directly held UK commercial properties and European property shares.

Ronald Blue & Co director David Flowers points out that as clients seek to diversify, one of the asset classes in which they want to invest is property, but there is not a great range of retail funds from which to choose. Consequently, he thinks the Thames River property growth & income fund is a useful addition.

Flowers notes the fund is made up of exposure to UK direct property, with the balance being split roughly 50/50 between UK and international property shares. “The fund will be non-correlated to fixed interest and equity funds and will thus be a useful diversification tool,” Flowers says.

Asked what he likes about the fund Flowers says: “The product brings a great investment team to the retail marketplace. Most of the team came over from Henderson Global Investors where they ran the TR property investment trust, which has a strong track record.”

Flowers also highlights the fund’s yield of 3.75 per cent after charges, which is paid quarterly, as helpful. He explains: “This should grow over time and will provide a useful source of high and rising income to the investor. Capital growth should also be expected.”

Discussing which clients may find the fund suitable Flowers mentions Sipp investors and adds that its low volatility and high income would suit drawdown asset allocation models.

Flowers draws attention to the incentives fund managers receive in terms of payment through the annual management charge and a performance fee.

He feels the performance fee is a good idea as it is only won on absolute positive performance.
Discussing the potential drawbacks of the fund Flowers says: “The fund is designed to grow to £200 million invested and will then cease taking new money. This means Thames River has no need, or plans, to pay renewal commission to introducers. The initial charge will be made up of a bid-offer spread of 5 per cent, of which up to 3 per cent is negotiated as commission. I would rather see a lower initial cost and some fund-based fee built in instead.”

He also mentions the fund is not FSA-authorised, so it will not be available to Pep transfers and Isa investment.

In conclusion Flowers says: “The managers have a very thorough and proven methodology which should continue to deliver good returns. But competition will come from the M&G Property fund, which is also based in the Channel Islands and has a strong pedigree, but this restricted to UK real assets. Otherwise, there are few alternatives outside insurance policy property funds.”

BROKER RATINGS

Suitability to market Average
Investment strategy Good
Charges: Average
Adviser remuneration Poor

Overall 6/10

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