Fidelity Global Property

webwiz

Anyone else invest in this fund or can explain it to me? I invested 6 months ago expecting a steady but relatively unexciting ride from property. But after I invested it went up like a rocket (cheer, cheer, cheer) then came down like a stick (boo, boo, boo) and I am now showing a loss. How can a property fund be so volatile? Something to do with reits?

dunstonh

Its not a bricks and mortar property fund but it invests in REITS. On the crude risk scale of 1-10, this fund has been rated 9. That makes it high risk. Bricks and Mortar property funds are risk rated around 5.

Long term, it should be a little cracker. I have some in there and have utilised it a number of times for clients. I will continue to utilise it in portfolios as I have faith in it.

homersimpson_3

Its not a bricks and mortar property fund but it invests in REITS. On the crude risk scale of 1-10, this fund has been rated 9. That makes it high risk. Bricks and Mortar property funds are risk rated around 5.Long term, it should be a little cracker. I have some in there and have utilised it a number of times for clients. I will continue to utilise it in portfolios as I have faith in it.

What is REITS & why is brick and mortar property fund lower risk? If this fund is losing money why over longer-time should it be a little cracker? What is the miniumum you can invest to make some real money and how long should you leave it there? can you get money out with paying a fee etc?

dunstonh

What is REITS

Real estate investment trusts
http://en.wikipedia.org/wiki/Real_estate_investment_trust

why is brick and mortar property fund lower risk?

Because they dont invest into shares (although you can get some mixed fund versions of both bricks and mortar and shares. So care is needed). Because there is no shares involved, you dont get the volatility and the bulk of the return is rental income. There is also no borrowing and most properties have long standing rental arrangements. Biggest risk is having a retailer or company not pay their rent.

Investment trusts can borrow money to invest. If it does well, it can make significant profits but if it goes wrong, it can make significant losses. REIT Funds invest into a range of REITs. Bricks and mortar property funds dont borrow money so the property is owned outright.

If this fund is losing money why over longer-time should it be a little cracker?

Lets put this in perspective. Its only been available 6 months and we have just had a correction on the markets which has, in general, hit higher risk areas more than others. You would be down about 7% now which is not far removed from the average drop.

What is the miniumum you can invest to make some real money and how long should you leave it there?

£1000 is the minimum currently but one of the fund supermarkets that has a minimum of £10 per fund is going to offer it (and schroder's version) in the next month.

As for how long and how much is worthwhile, that would depend on your risk profile and how it fits in with your portfolio. I wouldnt recommend anyone goes sticks big percentages of their portfolio into it. However, I think most portfolios should contain a percentage in there. The European focussed ones could be good value as they would include the "New Europe" countries and property is dirt cheap there.

can you get money out with paying a fee etc?

Reit funds are just OEICs like any other OEIC and most have daily dealing with no restrictions. If the OEIC provider (fund supermarket usually) has no exit charges, and most dont, then you wont suffer any. You dont have to buy them in a REIT fund but you can buy individual REITs. With Gordon Brown authorising UK versions, you will probably see a whole load of these being launched next January and no doubt some UK REIT fund OEICs coming with them.

EdInvestor

webwiz wrote:

Anyone else invest in this fund or can explain it to me? I invested 6 months ago expecting a steady but relatively unexciting ride from property. But after I invested it went up like a rocket (cheer, cheer, cheer) then came down like a stick (boo, boo, boo) and I am now showing a loss. How can a property fund be so volatile? Something to do with reits?

First of all it's global.Secondly it invests in shares in property companies listed in stockmarkets, not in actual buildings.This presumably includes US REITS as there are not yet any REITS in the UK.

It sounds like you want the sort of returns available from UK property funds run by insurance companies.These tend to be most easily accessed via a pension or one of those expensive investment bonds (aaargh).

THere are a few unit trusts listed here

A slightly more volatile experience can be had by investing in the offshore investment trusts run by the same big insurers.These invest in actual buildings, but because they are listed like shares and are liquid, they can be more volatile ( as we've seen in the past week or two.)

If you want the UK version of REITS, then you can invest in the shares of the companies which have said they will convert, eg Land Securities, Hammerson, British Land.

webwiz

dunstonh wrote:

Its not a bricks and mortar property fund but it invests in REITS. On the crude risk scale of 1-10, this fund has been rated 9. That makes it high risk. Bricks and Mortar property funds are risk rated around 5.

The irony is that I switched the funds out of Fidelity's corporate bond fund looking for more..........stability! but now that I am in I will stick with it until I when/if can exit with a profit

dunstonh

Thats the risk when you go DIY. (sorry had to say that really).

Had you gone with NU Property, Morley Property, ... they would have all been on par in risk with the corp bond.

EdInvestor

Many more people are sure to be confused about this when REITs get introduced - they will be volatile too.

webwiz

As at Xmas 2006 I have now been in for one year and am showing 18.6% profit so I am very happy but am a little concerned about the volatility.

Later now 23/2/2007 and it is still going strong. Now up over 30% in 14 months! Should I take some profits? Trouble is it's an ISA and I can't transfer just part of it to another ISA and if I cash some in I will lose the tax benefit on that part.

dunstonh wrote:

Long term, it should be a little cracker. I have some in there and have utilised it a number of times for clients. I will continue to utilise it in portfolios as I have faith in it.

I wonder what the pro is doing?