Threadneedle Property Investments has unveiled the Threadneedle property unit trust, a Jersey-based fund that invests in UK commercial property.
The fund was created by moving Threadneedle's sackville property unit trust from the UK to Jersey. The sackville fund was open only to UK pensions and charities, but the new fund will target a broader client base, including the IFA market and discretionary fund managers.
Chris Morrogh, the fund manager, will actively manage the portfolio across different sectors, including shops, offices and retail warehouses. Greenfield developments and properties such as showcase buildings will be avoided.
The portfolio also aims to diversify across regions. Half of the properties in the portfolio will be located in London and the South East, while the remainder will be based in the provinces. Property selection will be based on Threadneedle's in-house experience and information provided by external surveyors.
The property boom in the late 1980s led to a great deal of speculative development which resulted in many empty buildings when the 1990s recession took hold. Investment portfolios during the 1990s tended to move away from property investments in the 1990s, but are now popular again as investors seek refuge from volatile stockmarkets.
The fund's diversification across different types of commercial buildings around the country reduces investment risk, as low yields in some areas can be compensated for by other properties with higher yields. The prospect of rent rises, along with buying and selling properties at the right time could generate good yields, with some potential for capital appreciation.
However, the fund's success depends upon the fund manager's ability to find suitable properties with reasonable yields and make the right decisions at the right time when buying and selling them.