Property Funds

tigerspill

Hi,

I am looking for a property fund to supplement my LifeStrategy 40 fund. I am thinking around a 90:10 split between the two.

Can anyone recommend a fund(s).

Possibly
Legal & General UK Property Feeder I Fund Acc
and / or
M&G Feeder of Property Portfolio I Fund Acc

These are both UK focussed. Is this wise or is there a better diversified fund I should consider?

TheTracker

BlackRock Global Property Securities Equity Tracker D

UK: iShares FTSE EPRA/NAREIT UK Property ETF (IUKP)

InvestInPoker

Do you want a fund which has shares in companies involved in property? Or do you want to invest in an actively managed fund that actually has physical commercial property?

JohnRo

BlackRock Global Property Securities Equity Tracker D

It's on a bit of a tear at the moment, my holding seemed to be sat on -10% for much of last 18 months which wasn't pleasant given all the news about buoyant property markets.

InvestInPoker

TheTracker wrote: »

BlackRock Global Property Securities Equity Tracker D

This is a very good passive fund imo, highly volatile of course though.

Of course I am biased because it has outperformed everything else in my portfolio over the last 6 months

tigerspill

InvestInPoker wrote: »

Do you want a fund which has shares in companies involved in property? Or do you want to invest in an actively managed fund that actually has physical commercial property?

OK - So this I hadn't thought about.
What are the merits (nor not) of each option? What should I consider when choosing?

InvestInPoker

tigerspill wrote: »

OK - So this I hadn't thought about.
What are the merits (nor not) of each option? What should I consider when choosing?

Well if you go for the shares in property companies you are taking on the extra risk/return of equities. It is easier to be globally diversified with property equities than with physical property and you can get the costs down as low as you want but there will still be more volatility associated with these funds than ones associated with actual physical property. Also of course there will be more correlation with how your property shares are doing and your other shares than physical property would do.

Actual physical property funds with have lower long term returns but they will be more stable. They will also be slightly less correlated to your vanguard equities than the shares funds would do (although there will still be quite a lot of correlation). It's a bit more diversified. One thing that definitely drags on physical property funds performance is how much cash they have to hold. You can easily sell shares in a company but its not quite so easy to sell a giant retail park outside Birmingham. To allow investors to withdraw their money whenever they want physical property funds therefore have to hold a decent amount of cash - which is always a drag on returns. Either that or limit how much people can withdraw in some way.

tigerspill

InvestInPoker wrote: »

Well if you go for the shares in property companies you are taking on the extra risk/return of equities. It is easier to be globally diversified with property equities than with physical property and you can get the costs down as low as you want but there will still be more volatility associated with these funds than ones associated with actual physical property. Also of course there will be more correlation with how your property shares are doing and your other shares than physical property would do.

Actual physical property funds with have lower long term returns but they will be more stable. They will also be slightly less correlated to your vanguard equities than the shares funds would do (although there will still be quite a lot of correlation). It's a bit more diversified. One thing that definitely drags on physical property funds performance is how much cash they have to hold. You can easily sell shares in a company but its not quite so easy to sell a giant retail park outside Birmingham. To allow investors to withdraw their money whenever they want physical property funds therefore have to hold a decent amount of cash - which is always a drag on returns. Either that or limit how much people can withdraw in some way.

Thank you for this.
So I think my initial assumption was that the fund I was after actually invested in property rather than shares in property companies. I haven't looked but I guess the LS fund invests in some property companied anyway).

It looks like the L&G and M&G funds I mentioned at the top invest in property, though as you say, they seem to hold a fair level of cash (I assume to facilitate cash-flow) and also they seen to hold some equities.
The BlackRock Global Property Securities Equity Tracker seems to be an equity tracker focussed on shares in the property sector.

le_loup

If you are after a fund with physical property, it would be better to use an Investment Trust. They don't have to liquidate if there is a run.

masonic

le_loup wrote: »

If you are after a fund with physical property, it would be better to use an Investment Trust. They don't have to liquidate if there is a run.

The trouble with that is the good ones are currently trading at high premiums.

JohnRo

TR property?