THREADNEEDLE PROPERTY UNIT TRUST
Type: Unit trust
Aim: Growth by investing in UK commercial property
Minimum investment: Lump sum £25,000
Place of registration: Jersey
Investment split: 100% in UK commercial property
Isa link: No
Charges: Initial up to 7.5%, annual 1.25%
Commission: Renewal 0.5%
Tel: 0800 0684000
Suitability to market 6.7
Investment strategy 7.7
Past performance 7.7
Company's reputation 8.0
Product literature 5.7
The panel: Eric Woodward, Director, EP Ward & Co, Anton Robinson, Director, City Asset Management, Michael Posner, Principal, Charter Devon Law & Co.
The Threadneedle property unit trust is a Jersey-based fund that invests in UK commercial property.
Considering the market suitability of the fund Posner says: “It is an unclassified Jersey-based unit trust. It invests in an actively managed portfolio of UK commercial property.”
Robinson says: “There is more competition than there was six months ago. It will fit in at the top end of the market. People are diversifying away from equities into property and bonds.” Woodward says: “At the moment, property funds are dominated by the insurance companies who market them as a link to their single premium bond funds. However, they have much lower minimum investments.”
Identifying the clients the fund could suit Robinson says: “Someone looking for lower risk, lower volatility and to diversify their portfolio, possibly reducing their equity content. It is suitable for high income seekers, someone heading for, or in, retirement. One that likes a good steady chug.” Woodward says: “I can see pension clients in particular being attracted to a professionally managed portfolio of property, supported by a good rental yield against current interest rate levels and lower charges than insurance-based funds. I would be surprised if it attracts many individuals because of the high minimum investment.”
Posner says: “The fund is designated for use by pension funds, insurance companies, institutional investors, intermediaries and individual investors with more than £250,000 to commit to it. It is intended as a longer-term investment, for a client seeking a share in an actively managed commercial property portfolio, with an intended higher than average yield. The product is aimed at a sophisticated investor, with sufficient wealth to await long-term growth in the value of the portfolio.”
Turning to the fund's marketing potential Woodward says: “Pension fund clients will be attracted to this as a diversification from equities. Some limited companies will also be attracted by a long-term alternative to deposits.” Posner says: “As a complex investment of limited access to individuals, it is marketable on a face-to-face basis, as it requires explanation and understanding by the investor. It is difficult to envisage any other suitable method of marketing this, especially having regard to its unclassified status.” Robinson views it as another property fund to mention to prospective clients.
Looking at the main useful features and strong points of the fund Posner says: “The investment has been designed to offer tax-efficient returns and access to a well-managed property portfolio with a relatively high yield. Because the management team are highly experienced in this area of investment, their pedigree and undoubted expertise must make any offering of this nature an interesting proposition.”
Robinson mentions the high quarterly income and Threadneedle's good track record. Woodward says: “It is a good quality portfolio of commercial property which offers good diversification. The rental yield alone makes it an attractive proposition at current deposit rates.”