U.K. Property fund

Thrugelmir

economic wrote: »

the main reason why they do this is because there are no investment opportunities for these companies as the economy is so dire.

I see no connection between the underlying trading business, and borrowing money to fund share buy backs. More akin to financial engineering as appears to improve EPS. With no actual improvement in profit.

Reaper

Dird wrote: »

Why avoid unit trusts? GB00BPFJCF57 is identified as a unit trust but I guess you mean the ones who invest in property directly?

If you put money into a Unit Trust they go and and invest that money directly. If you sell up they have to liquidate some investments to pay you back.

In the case of property fund it can be hard to liquidate investments if lots of people want to sell since that may mean organising the sale of a property or lease they may be locked into. When lots of people want to get out of property the fund can struggle to pay out. Recently with the Brexit turmoil some property funds closed and refused to let people sell.

With Investment Trusts you are buying shares in the company doing the investing instead, so your money is not linked directly to the fund's investments. That means you should always be able to get your money out. The price you get may not be great in a crash, but at least you can sell if you wish.

Dird

So is GB00BPFJCF57 incorrectly labeled by Morning Star & Fidelity?
Fund Type: Unit Trust
Stocks allocation: 98.31%
Property allocation: 0.27%
Category: Property - Indirect Global
Benchmark: FTSE EPRA/NAREIT

dunstonh

Dird wrote: »

So is GB00BPFJCF57 incorrectly labeled by Morning Star & Fidelity?
Fund Type: Unit Trust
Stocks allocation: 98.31%
Property allocation: 0.27%
Category: Property - Indirect Global
Benchmark: FTSE EPRA/NAREIT

That is a property share fund. Not a bricks and mortar fund. A very different type of fund.

A few years back, the high risk property share funds were put into the same sector as the lower risk bricks and mortar property funds. So, they both end up in the property sector but one holds shares in property companies and is therefore subject to movements in property pricing, equity pricing (and currency fluctuations in the case of global property funds). The other holds actual property and is not affected by equity price movements but is subject to liquidity issues should a large number of withdrawals occur that were not known about.