Investing in Property

redux

Maybe I've got the discount the wrong way round.

£96

bowlhead99

Thanks guys/girls - we'll let you know in due course how it shakes out after taking our squabbles out of the public eye !

Hopefully the upshot of it is that it's now clear to newbies how the pricing structure works. Which was perhaps not made clear by IIP's platform when he feared the new version of the fund would be too expensive to be worth sticking with. So maybe of use to some.

Back on track:

VT82 wrote: »

Sounds like it's a lot easier to invest smaller amounts in commercial property-linked funds than in residential property and buy to let.

Are there any decent HPI-linked structured products out there at the moment? The OP wouldn't be able to drip-feed into it, but if they can get the commission rebated, there may be something that suited their aims as an alternative to the Property Moose suggestion?

Indexes which relate to data surveys such as Halifax house price index or whatever, are inherently difficult to invest in with safety. Unlike a FTSE 100 basket of stocks, you can't physically replicate national residential house prices in one big fund that everyone buys into.

So effectively the assets of a structured product in that sector are a bet on or against a "return swap", ie a derivative piece of paper signed with a financial counterparty, rather than something tangible like land or buildings or a share in a company or pool of physical assets. This gives you risk that they won't be able to pay up, as well as the uncertainly of the direction of returns on which you've gambled.

Some residential index derivatives are accessed by hedge funds or other exotic investment structures to get exposure to certain "themes" for their institutional or high net worth clients. They're not generally promoted to the layman in the DIY market, though IFAs, wealth managers or tied advisors might get you in I suppose, from time to time, depending on what's in the market.

One way to bet on house prices is by spread betting the index with a spread bet firm like IG Group. But of course, there you're really betting that the house prices will go up or down **more or less than everyone currently expects** rather than simply whether you think the pure index movement will go up or down over time.

So, residential property is hard to get at. And investing in housebuilding companies is not really the same. So most people take their real estate exposure through commercial property funds which is a different market really but can do a useful job of being uncorrelated with general equities or bonds, at times.

HTH

Apodemus

coyrls wrote: »

I've been following this thread and to me it is very clear that Bowlhead has won the bet.

...and makes me very glad that I don't play poker!

InvestInPoker

I have emailed HL so presumably I will have the reply by this time tomorrow, I will pm bowlhead then.