Property Tracker

Birdwell

chockydavid1983 wrote: »

A few posts above, Bowlhead confirmed that the Aviva fund wasn't a feeder.

So he did... Cheers Bowlhead and David!

bowlhead99

chockydavid1983 wrote: »

A few posts above, Bowlhead confirmed that the Aviva fund wasn't a feeder.
It's actually the one I'm leaning towards on iWeb given that the rest seem to be feeders or REITs.

It seems to be a proper fund in its own right rather than a feeder, given that several sites including HL and the Aviva website itself list its direct portfolio. Fidelity and a couple of others have more scant information. Possibly it just acts as a vehicle to put money into another Aviva-managed product causing some platforms to not have the proper look-through; I haven't checked the prospectus.

I mistakenly said in the post above that it was a PAIF, which I've edited as I realise it isn't; it's a unit trust. It is a fund portfolio that's been running a long time, formerly Norwich Union - Aviva say it was the UK's first property unit trust.

A PAIF is a newer more modern and tax-flexible product for investing in property than an 'old fashioned' unit trust, but not all portfolios have decided to convert to that structure; there are costs involved in doing it. So this one remains as a traditional unit trust. As mentioned in the earlier post, a unit trust is what you would use as a feeder to access a PAIF if you couldn't get or didn't want direct access into the PAIF with streaming of income types. But if the product from Aviva isn't a PAIF anyway, and is a unit trust itself, then investing in that isn't going to get you a better more tax efficient result than investing into the unit trust feeder for someone else's fund.

Don't 'let the tail wag the dog' in terms of taking the only option you can find to meet some particular criteria rather than actually getting the portfolio you want by shopping around further.

From previous posts here I'm not sure that IWeb / Halifax fundcentre's budget-priced platform is advanced enough to handle PAIFs so your choice might be restricted to unit trusts / oeics only, even if the manager (like M&G, L&G, Threadneedle etc) is offering a PAIF via some platforms

kidmugsy

bowlhead99 wrote: »

You can decide for yourself whether that profile of returns over the last decade would have made a successful diversifier to the popular global equities and bonds funds which also crashed over the two years to March 2009 and grew in the eight years thereafter.

What would have been useful diversification? Gold? Long-dated Gilts?

EdGasket

bowlhead99 wrote: »

Yes, its share price is only down 60% in the decade since the heady heights of 2007.

It has also gone up 150% since 2007; just depends which part of 2007 you cherry pick

chockydavid1983

bowlhead99 wrote: »

From previous posts here I'm not sure that IWeb / Halifax fundcentre's budget-priced platform is advanced enough to handle PAIFs so your choice might be restricted to unit trusts / oeics only, even if the manager (like M&G, L&G, Threadneedle etc) is offering a PAIF via some platforms

Yeah, it does look like all the ones available on iWeb are either feeder's or the Aviva unit trust.

Zola.

cfunding988 wrote: »

Attn:

We are Private Investor. We offer funding at the rate of 5% interest rate- Interested person should contact us for: Personal Loans? Business Loans? Mortgage loans? Agricultural and project funding? Contact us today at: cfunding988@gmail.com

Signed
Management.

badger09

@ Zola

Best not to quote :spam:;)

crazychamps

Apologies for rekindling a 1 year old thread, however it has been very informative and contains some solid information.

As an investor using an ISA, I understand from the above posts (notably Bowlhead's) that a PAIF is best utilised in this situation as it avoids the investor paying tax on the different types of earnings achieved from this fund.

However, with a PAIF being an open ended fund and quoting the below post by masonic, isn't the following a key disadvantage of a PAIF: in a fire sale or house market crash, won't all investors suffer when some of them pull out as that would cause the fund manager to sell a property at discounted value without penalising the individuals the same way that a closed ended fund would (i.e. in a closed ended fund the seller would be subject to a hefty discount below NAV)? As such, there seems to be a benefit and disadvantage to holding a PAIF instead of a REIT (a closed ended fund) over the long term; whereby the benefit is that the UK investor (using a SIPP or ISA) gets the gross income with no tax liability, on-the-other-hand the fund that they hold would suffer a loss of a property as short term investors pull out despite them maintaining their long-term hold approach?

masonic wrote: »

I experienced being in an open ended property fund within my workplace pension in 2007 when something along these lines happened, but it seemed the fund still seemed to suffer for a much longer time after the event than I expected, but perhaps that was just me expecting too much from the recovery...

Let me try to illustrate what I think you are saying using some completely made up numbers

Suppose I invested in a property fund composed of 10 x £1m properties, and it has 10 million units at a price of £1. Along comes a downturn in the market and the NAV drops 20%, so each property is now worth about £0.8m.

Lots of investors get worried, because the fund has the word "property" in it, and we all know property cannot fall in value (;)), so a group of them want to pull out their money totalling 1m units. Cash reserves have already been depleted, so one of the properties needs to be sold to meet these new redemptions.

Due to a short marketing period it only fetches £0.7m. So, to protect existing investors, the fund manager adjusts bid price to this level, so those leaving actually see a 70% loss of capital. 1m units are cancelled and the £0.7m is removed from the fund and the remaining investors still between them have 9m units and £9m worth of property as valued before the fall.

Is that essentially how the redemptions work?

Also, with regards to funds of REITS (such as the Vanguard Real Estate Index Fund), if I may run through some pros / cons that I can see and hopefully you can keep me right and let me know if I am missing anything:

Pros

It allows you to diversify across an incredibly large range of properties covering different sectors such as commercial, residential, warehouse, industrial etc...

[List=2][/LIST]

Cons

It adds another layer of charges ontop of those that the REIT charge; however it can be small (ranging from 0.2% - 0.5%), while providing the added diversification

[LIST=2]The fund is most likely to be an OEIC. Also, being invested in REITS the earnings are taxable and may not fully suit an investor using an ISA/SIPP when compared to a PAIF. As such, this may dent the return achieved by the investor[/LIST]