Freehold Income Authorised

MarcoM

Hi,

I was researching property oeic funds and came across the Freehold Income Authorised Acc.

I know holding freeholds directly can be quite lucrative but I was intrigued by this fund's performance and it seems to return a steady 4 to 6% and even during the crash it seemed to hold on pretty well.

Would you consider this fund in a portfolio amongst other more "volatile investments?

Thought appreciated.

Freecall

Bump!

I do have a view on this but am really interested to see what others have to say so I thought that I would give it a bump.;)

MarcoM

needs another bump I think.

I like the look of that flat line during the 2008 crash.

Jegersmart

Personally I hold and use Schroder Global Property Income Maximiser - I like the yield as well.

I have never heard of or looked at the fund you mention....but the performance is just a flat ascending line which seems strange.....

imho

J

Ark_Welder

The fund performed differently to other property funds because the assets that it holds (leases) did not fall in price as did physical buildings. So not directly comparable to funds that hold either physical property or property company equities. So it should provide low/no correlation to either physical property prices or to equities. A steady performer rather than something that is ever likely to shoot out the lights.

Previous thread

ztkr

This is an interesting fund. This funds differs greatly from most property funds, in that it only holds the freeholds of properties, which are rarely revalued, hence the lack of volatility in the valuation. It is certainly an interesting proposition as it could dampen down volatility in a portfolio and increase diversification. I am tempted by this and the slow but steady past performance.

Rather than a change in the valuation of ground rents, I see the biggest risks as: a) panic sell-off like 2008 (the fund managers might be obliged to sell holdings, which could result in suspension as happened to commercial property funds); b) I don't know if this type of fund is as tightly regulated as equity funds.

Minimum £5k investment and not eligible for ISA may put some people off.

I have one other problem: it's not available through my fund manager (HL). Not sure if it will be difficult to find elsewhere.

Aegis

Bear in mind that flat line trends are either caused by safe and steady assets or by those which are very infrequently traded and are revalued based on assumptions. Freeholds are not exactly a common investment class, with only a few major providers offering funds into these types of holding, and in the event of a sudden flight out of the fund, the market may dry up quickly and leave investors waiting a long time to get their money back.

chiefnoodle

philc27 wrote: »

and not eligible for ISA may put some people off.

A look at trustnet.com's Factsheet (fund Code=C2F08) shows that they have a share class called "ISA" which presumably means it can be held in an ISA (?)

ztkr

chiefnoodle wrote: »

A look at trustnet.com's Factsheet (fund Code=C2F08) shows that they have a share class called "ISA" which presumably means it can be held in an ISA (?)

That's an interesting development. I don't believe the ISA class existed a couple of years ago, when I made the post that you reference above.

Now that the Freehold Income fund is available in an ISA, I will probably take another look. Its returns may not be massive but they are consistent and not correlated to the performance of other asset classes such as equities and bonds, which is always a good thing.

However, ongoing charges are relatively high (the OCF is 1.64%, according to Trustnet) and the fund now has a 5% dilution levy, which would make it an unsuitable choice for short-term investment.

hennerz

Through which brokers is this fund available please?

chucknorris

I might consider this, a while ago I was thinking about investing directly in freehold ground rents, but I went off the idea when I heard that you can end up continually chasing some slow leasehold payers. I think I would find that very frustrating, but this is something that I would consider. Especially when I sell some of my investment property, as it would maintain portfolio diversity.