SWIP Property Trust - why?

Imnoexpert_2

I'm putting together my questions to an adviser who has suggested a portfolio of funds. Most of the funds(15) I'm not questioning because as I have said in another post - who knows?

I expected there to be a UK property element in the portfolio but am surprised that it is the SWIP property trust. Over 1 and 3 years it is 4 th quartile.

The questions I hope they will answer is Why this fund? What do they know that I don't (and god knows there is lots I don't know)

Can anyone out there answer why this fund has been chosen - or offer suggestions of any other sensible questions I should ask them about this fund selection?

Thanks

dunstonh

I expected there to be a UK property element in the portfolio but am surprised that it is the SWIP property trust. Over 1 and 3 years it is 4 th quartile.

Most bricks and mortar funds have been 3rd or 4th quartile in recent years as the property share funds, bizarrely in the same sector, have outperformed bricks and mortar funds in that time.

jamesd

Diversification from gilts and bonds makes it look like a relatively good idea, given the current price for gilts and high quality corporate bonds. Better to buy into a temporarily depressed sector than one that's more like bubble territory.

I'd give really serious thought to doing the same sort of thing instead of a high weighting in gilts.

Imnoexpert_2

Thanks guy's. I hadn't looked at it this way. I feel happier now

So my reliance on sector's, and quartiles (particularly in the property sector ) was a bit naive.

I noticed that International Property (which I guess is more risky and volatile) as well as property share funds are in this sector so it makes more sense now.

I didn't get a ringing endorsement of this particular fund from the forum though, and personally I don't find commercial property a very attractive proposition (Internet retailing, home working will surely all grow in the future so shops and offices may decline in popularity....?). But it's an element in diversifying the portfolio.

gadgetmind

Imnoexpert wrote: »

I didn't get a ringing endorsement of this particular fund from the forum though, and personally I don't find commercial property a very attractive proposition

I don't tend to like investing in open-ended bricks and mortar property vehicles because of the miss-match between investors buying in and out quickly and the very illiquid under-lying assets. As soon as there is a dip, the hot money leaves, and the fund has to block further redemptions while they try to flog off properties at the bottom of the market.

I much prefer REITs, many of which are currently on tasty discounts, which means you can get £1 of underlying property for 70p. I do also have a small holding in a Global Property Securities fund, which is an open-ended fund that holds shares in property companies.

Yes, commercial property is a good diversifier, and the income is currently in the 5-7% range, which is good for this stage of the cycle.

As JamesD says, gilts present a problem right now, so I've upped my allocations to corporate bonds, property and infrastructure.

jamesd

I'm not currently familiar enough to give a ringing endorsement, so don't take that as negative, just lack of sufficient knowledge to specifically say I like the fund. If I recall correctly I used to like it some years back.