Balancing a pension portfolio

Ark_Welder

bigadaj wrote: »

Going back to jamesd's original list I found myself wondering about commercial property. I can see the logic in terms of their reduction in value since the gfc, and that many forms of bonds are unattractive but I wonder about the future for much commerciall property, prime london looks good but much of the rest of the UK is struggling, be it office or retail. In which case I guess we're looking somewhere else in the world?

Looks like you're giving a reason for investing in UK property outside London...;)

There is also industrial properties to consider, along with residential. And depending upon whether sub-sets are considered, leisure and retail warehouses. Then there is infrastructure, and how this is defined.

Fancy starting a thread on the subject, back over on the S&I forum?

jamesd

bigadj, if there weren't areas where it was struggling, it wouldn't be inexpensive. That in turn is what leads to the relatively low price and improvement prospects during an economic recovery. You don't get the best prices after the recovery is already finished, you need to be trying to work out what's likely to happen and when and buying while prices are still depressed by the bad news.

Looking elsewhere in the world might also be interesting.

bigadaj

jamesd wrote: »

bigadj, if there weren't areas where it was struggling, it wouldn't be inexpensive. That in turn is what leads to the relatively low price and improvement prospects during an economic recovery. You don't get the best prices after the recovery is already finished, you need to be trying to work out what's likely to happen and when and buying while prices are still depressed by the bad news.

Looking elsewhere in the world might also be interesting.

Fair enough, I've just reviewed my post and noted I got distracted before explaining my point, apologies.

It just seems to me that much of UK commercial property is either office or retail, and retail prospects are dire, particularly with so much internet business. London valuations seem full, as they almost always do, so I'm fairly bearish on UK property. I currently have a single fund, probably 5% or less of portfolio, which I think is uk focused.

This seems like another area to look into in more detail, I have reasonable exposure to emerging market equity, but nothing in property or indeed bonds which look to have potential, similarly infrastructure which should act in a similar way. Currently have a lot in cash but little in bonds and think that with continually reducing rates then I need to find a better home for at least some of it.

jamesd

It would depend on the properties. Funds with well funded tenants on long agreements and with good rent escalation clauses should do well. Those with less stable tenants, maybe not so. And for commercial property in general, in open-ended funds, investors need to be aware of the chance of redemptions being suspended if there is a sustained demand for redemptions that makes it necessary to sell properties rather than just pay out with cash or rental income.