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Property Trusts
atlanticspan
Posts: 28 Forumite
Hi All,
I would be grateful for your advice.
I am a man in my late 50's,and I'm invested 60/40 in a mix of passive Equity & Bond funds.I would like to reduce my exposure to equities by approximately 10%.and reinvest it in another asset class. I was considering a REIT to give me further diversification and perhaps a little negative correlation to my equities.
As I know little about this type of security, I would be grateful for any advise on their pitfalls and the type of REIT I should consider.
Many Thanks.
I would be grateful for your advice.
I am a man in my late 50's,and I'm invested 60/40 in a mix of passive Equity & Bond funds.I would like to reduce my exposure to equities by approximately 10%.and reinvest it in another asset class. I was considering a REIT to give me further diversification and perhaps a little negative correlation to my equities.
As I know little about this type of security, I would be grateful for any advise on their pitfalls and the type of REIT I should consider.
Many Thanks.
0
Comments
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REITs tend to be fairly correlated with equities, or at least have been over the last cycle.
Perhaps you might also like to look at infrastructure?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Rather than REITs, you may want to look at bricks and mortar property funds which are classed as lower risk than property share funds.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Rather than REITs, you may want to look at bricks and mortar property funds which are classed as lower risk than property share funds.
Thank you for your reply. I know you don't give advice,but would you mind advising the description these funds normally go under,to enable me to do my own research.
Thanks again.0 -
atlanticspan wrote: »Thank you for your reply. I know you don't give advice,but would you mind advising the description these funds normally go under,to enable me to do my own research.
Thanks again.
The usual description is "direct property funds", but under Trustnet for example they are all lumped together. You need to read the descriptions to be sure - either they invest in property companies or their assets are given as addresses. A good clue is the trustnet risk score. Direct funds are typically 40 or less, indirect are much higher.0 -
Rather than REITs, you may want to look at bricks and mortar property funds which are classed as lower risk than property share funds.
A lot of REITs do hold property directly, though some don't, and some do a pick and mix by holding UK directly and overseas indirectly. Some only hold developed projects, some mainly develop and sell on, and some (again) combine the two approaches. Lots of choice!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I've been holding Legal & General's UK Property PAIF - and it's been a good solid earner - just an unfortunately high bid-spread offer
Contemplating adding M&G's Property Portfolio
Only slight concern is that property's done well for a while, and with prices stagnating in London, we *could* be on the verge of a slowdown0 -
I used to invest in REITs but found they offered little diversification as they seemed strongly correlated with equities. The alternative, as has been said, is bricks and mortar property funds, but the issue with them is, in a crash, it can be hard to sell your holding as the properties have to be sold (at a bad time). In the credit crunch some of them restricted sales if I remember correctly. So bricks and mortar funds are not very liquid (which makes them higher risk to me) but they do offer genuine diversification due to the low correlation with equities.
As a growth investor (as opposed to income, ie looking for yield) and a homeowner, I struggle to see the point of adding property funds to my portfolio, for the reasons above.0 -
luckylizard wrote: »The alternative, as has been said, is bricks and mortar property funds
In what way is a REIT that only holds property directly different to a fund that does the same? (Other than the whole open/closed basis.)I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »In what way is a REIT that only holds property directly different to a fund that does the same? (Other than the whole open/closed basis.)
it isn't for the sake of this discussion, but when I said I previously invested in REITS I meant ones that invest in property shares only.0 -
As your current investments are passive, consider BlackRock Global Property Securities Equity Tracker D Acc which is what I and many others use for Global Property. It was remarkably performant in 2014 at 29% which may make you more or less interested in investing in the sector. There are also UK trackers.
According to Tim Hale's Smarter Investing, the correlation between UK equities and global property is low at 0.5.0
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