switch out of your property investment fund

TBeckett100 · 7 October 2007 at 7:36PM

According to the financial advisers paper i receive, Norwich Union have put 2 properties on the market to "test the water".

These funds still have large out pourings of cash and I predict more and more property will go on the market in the coming months. switch out now whilst you can.

The_Fiddler_2 · 7 October 2007 at 8:16PM

So you are saying - "Don't invest in property funds?"

masonic · 7 October 2007 at 8:45PM

You don't think the funds will eventually recover? Seems strange to to be advising people to sell up after the funds have already fallen significantly if they could just sit tight and ride it out.

TBeckett100 · 7 October 2007 at 8:50PM

the price adjustment was put in place to try and stem the outflow of cash. this is not working ( i have spoken to the reps at all the larger fund management groups). whilst the funds have cash sloshing around in them, these can fund payments out but there will come apoint when property will have to be sold and the "6 month access" restriction could be put in force.

obviously if property has to go on the market, prices may have to come down if the market becomes saturated, meaning remaianing fund holders may see some losses on their fund.

The uk property fund managers tell a good story, but I became alarmed then the Scottish Widows European Real Estate fund increased UK property exposure (i.e dripping money into their Uk fund via the back door)

if you still want property switch into non UK property (Norwich European Property), do not wait for a reversal on the prices, withprofit bonus rates never recovered and the fund managers are raking the profit in.

Also, remember the MVAs on the with profit policies and how quick they came in across the board?

Those who question the recent overnight price adjustment, just remember you are probbaly still in profit and you have had a good run.

Be warned, investors are like sheep and it will only take 1 horror story in the torygraph before all investors start to switch, very quickly.

dunstonh · 7 October 2007 at 9:02PM

Remember that not all property funds are equal. The lower risk property funds are still turning in decent returns.

There is scope for 5-10% drop over the next 6 months with some but the lower risk ones seem to be handling things ok now. Indeed, I did a scatter graph of all the life property funds and what was noticeable that in general the riskier ones have lost money and the low risk ones havent. That could be down to cash content as a lot of the lower risk ones are heavier in cash and are riding through this better.

TBeckett100 · 7 October 2007 at 9:54PM

but we all know how quick the cash can drain!

wasnt it a few months ago that property funds couldnt buy property quick enough and they were swimming in cash! the tide will turn and all uk property funds could bear the brunt, and i guess the UK Reit market as well as they will be hit if the sector took a downturn,

JDinho · 7 October 2007 at 10:04PM

A lot of the performance numbers will be determined by the next full revaluation of the portfolio by Surveyors. It is possible that valuations could fall on all but the best London office property.

I wonder how many of investors know if whether their fund can postpone their redemption should they all run for the same door?

jimatko · 8 October 2007 at 6:41AM

I thought this chart would bew interesting to show. It is typical of property investment trusts.

[IMG]http://webfund5.financialexpress.net/trustnet/gifchart.asp?compareflag=p&fg=1&fontsize=8&gphtype=4&hdg=13&hdgpos=1&ht=200&vgridint=1&wd=350&yaxpos=1&zeropcstyle=2&axcolour=H000000&bdcolour=HFFFFFF&bgcolour=HFFFFFF&ftcolour=H000000&gdcolour=HCEDFEF&showdate=1&logopos=3&chartbgcolour=HFFFFFF&plotpixsize=1&fontname=arial&bgbs=1&bgbp=0&strdata=http://www.trustnet.com/it/funds/charts/xml/29209V.txt&code=Share Price,NAV&gpcolour=H082C84,H000000&span=60[/IMG]

A discount of 25% to NAV. The trust has 150% gearing.

So, if you want to buy £100 of assets for £75 this is the way to do it. To fully understand the risk however you would need to fully understand the borrowing - has this been fixed or is it variable?

TBeckett100 · 31 October 2007 at 11:14PM

Norwich Union announced last week seconf price adjustment. get out now of uk property and watch it unravel. the volume of switch requests cannot be coped with

Joey122 · 1 November 2007 at 1:51AM

I agree - Property is so overvalued by any standards - Get out whilst the music is playing.

People working in Investment banks are struggling to buy a one bed flat in London - I ve no idea what people working in Tesco's are doing.

dunstonh · 1 November 2007 at 11:07AM

You need to make a distinction between bricks and mortar property funds and property share funds. Many funds, including NU, hold both. Some hold only shares or only bricks and mortar.

You also need to look at the difference between commercial and residential.

There are still some good low risk commercial bricks and mortar only funds which are worth having. Residential looks weak and property share has had problems and could still get worse but could also get better if interest rates drop.

A lot of the outflow on NUs fund is from institutional investors who have realise they can get better returns on cash as the interest rates went up. If interest rates go down, then expect the outflows to stop and the money to return.

switch out of your property investment fund

Comments

Confirm your email address to Create Threads and Reply

🚀 Getting Started

Categories

Is this how you want to be seen?

Get our FREE Weekly email full of deals & guides - and it’s spam-free