switch out of your property investment fund

munk

dipsomaniac wrote: »

the large daily movement will be due to the pricing basis of the fund moving from a cancellation (more sellers than buyers) to an offer (more buyers than sellers) basis - vica versa.

I thought about it after I posted last and thought it couldn't be right that it was a sale of physical property that made all those spikes in the charts given that the reinvestment from the sale of a property would take quite a long time - certainly more than the day or two that seems to be the norm for the SWIP fund.

Your suggestion that it's some kind of 'dilution' effect (if that's the right term) would imply that there's a very substantial chunk of money been withdrawn from the fund, a dilution levy has been imposed ... bleh can anyone explain in more detail? <- me getting head around it (trying to anyway)

dunstonh thanks for the info, I've not looked at L&G or M&G property funds as yet, will do so. I looked briefly at the NU fund earlier and it appears to have performed very similarly to the SWIP fund and generally appears quite similar in most respects - although the 'spiky' graph seems to be absent from the NU fund's charts...

The SWIP property fund 'spikes' were quite alarming at first - a huge (well relatively huge for the portfolio risk profile) drop of 5-10% in one single day but then a bounce back the very next day thankfully which seems to be the norm over last few months.

Must say out of the various asset classes assessing property fund performances seems to be the hardest of all, any tips on analyzing property fund performance?

munk

Yant1 wrote: »

Ultimately you go with what you believe in, but as i made out on the other thread I believe commodities eg metals, oil and gas will prove a lot stronger then property will over the next 3 years.

Personally for my own portfolio I'm staying clear of property but for this portfolio (mum's less risky profile) I'm trying to find alternatives to equities and bonds that don't incur a huge amount of risk and it's hard to find that in commodities/resources... or is it? What other options other than property (and bonds) are there that have a similar low correlation to equities with a similar low volatility?

Are zeroes to be considered along the same lines/riskiness as bonds funds? I read into them and they do seem quite convoluted and potentially dangerous (problems earlier this decade in zdp markets) although their volatility seems very similar to bonds and the method of trading also seems similar to bonds in some respects (split capital ITs paying out in fixed terms similar to bonds).

At one point I was considering just investing in a fixed term high street bond (when the rates were up over 7/8%) just because they looked much better value than the current bond funds...

Although I said emerging markets are good there are bubbles forming in them, eg petrochina, chinamobile. One good tip is look at the top ten investments of funds and see if you agree with them/appraise the companies. To avoid the minefield and yet stay in the best market ie emerging ones id look for funds that aim to be more value and fundamentals based.

This seems like an impossible task in somewhere like China at the moment - the wild west in terms of lawlessness (economic lawlessness!). The fundamental principles don't seem to apply.

One last thing... Happy hunting. :beer:

[Deleted User]

Joey122 wrote: »

I ve decided to put my 4k allowance in this fund :

Neptune Global Equity Accumulation - Should be the place to be!

Looks like a extreemly good fund Joey should weather this turmoil well looking at it

Good pick. :beer:

[Deleted User]

Personally for my own portfolio I'm staying clear of property but for this portfolio (mum's less risky profile) I'm trying to find alternatives to equities and bonds that don't incur a huge amount of risk and it's hard to find that in commodities/resources... or is it? What other options other than property (and bonds) are there that have a similar low correlation to equities with a similar low volatility?

Not alot unless you want poor returns, money is too cheap IMO

BlackRock UK Absolute Alpha (Class P) (Accumulation) perhaps, an equity with hedge capabilitys thus apparently less risky.

Are zeroes to be considered along the same lines/riskiness as bonds funds? I read into them and they do seem quite convoluted and potentially dangerous (problems earlier this decade in zdp markets) although their volatility seems very similar to bonds and the method of trading also seems similar to bonds in some respects (split capital ITs paying out in fixed terms similar to bonds).

zeros can be risky IMO, not something that interests me http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2001/10/13/cmzero13.xml

At one point I was considering just investing in a fixed term high street bond (when the rates were up over 7/8%) just because they looked much better value than the current bond funds...

Not a bad idea as long as you get the best rates you can get

This seems like an impossible task in somewhere like China at the moment - the wild west in terms of lawlessness (economic lawlessness!). The fundamental principles don't seem to apply.

Where there is a will theres a way, you never know if theres a enron under the surface, but you can just use common sense and as they say if it sounds too good to be true...

Whats the first thought in your head as you see the capitalisation of china mobile, or perhaps amazon.com, I personally think, MY ARS* :rotfl:

edit, the global bonds seem to still be making money, comes back to my theory of trying to find the value world wide, these bonds under the remit to search global.

http://www.h-l.co.uk/fund_research/security_details/sedol/0143972.hl

cheerfulcat

munk wrote: »

Personally for my own portfolio I'm staying clear of property but for this portfolio (mum's less risky profile) I'm trying to find alternatives to equities and bonds that don't incur a huge amount of risk and it's hard to find that in commodities/resources... or is it? What other options other than property (and bonds) are there that have a similar low correlation to equities with a similar low volatility?

Have you looked at gilts? Another option is global generalist investment trusts, particularly those with a mandate to preserve value such as RIT.

At one point I was considering just investing in a fixed term high street bond (when the rates were up over 7/8%) just because they looked much better value than the current bond funds...

Just to be clear: you do know that a bank/building society " bond " is not the same as a corporate/government bond?

dipsomaniac

i wonder how many people are trying to surf the 'pricing basis' wave at the moment?

dipsomaniac

munk wrote: »

Your suggestion that it's some kind of 'dilution' effect (if that's the right term) would imply that there's a very substantial chunk of money been withdrawn from the fund, a dilution levy has been imposed ... bleh can anyone explain in more detail? <- me getting head around it (trying to anyway)

if the underlying value of the property in the fund was 100 the price of buying/selling units in the fund (ignoring any initial charge) would look something like this;

creation price - 105.00
aquistion costs - 1.00
stamp duty - 4.00
NAV - 100.00
disposal costs - 1.00
cancellation price - 99.00

if there was more buyers than sellers, units would be created at 105.00 - more sellers than buyers units would be cancelled at 99.00

as the manager doesn't want to be creating/cancelling units every day he holds a box of units that he can use to match trades.

when the fund is on a offer basis an investor would buy units at 105.00 plus any initial charge - the bid price for investors selling units would be typically 0.5% below the creation price. in the example above this would be 104.48.

so on a offer basis (more buyers than sellers) the manager buys the units back from the seller at 104.48 and can sell them again at 105.00 - making his/her profit.

when the fund switches to a cancellation basis (more sellers than buyers) the fund manager has to change the bid price to the same as the cancellation price of 99.00 - in this example, a drop of 5.2% overnight.

it is worth noting that the last time that NU had switched to a cancellation basis was 12 years ago. there box of units is probabley approx £10 million

Jonbvn

NU have just released an "internal" global property fund "to diversify away from the unstable UK property market" (their words not mine).

http://www.h-l.co.uk/news_and_expert_views/fund_news/articles/27757.hl?pr=article&type=cw

[Deleted User]

Makes sense as places like bulgaria, cyprus, lithuania and a lot of developing countrys like china, india will probably do very well out as people search for value in markets that are not so overpriced.

jon3001

munk wrote: »

Personally for my own portfolio I'm staying clear of property but for this portfolio (mum's less risky profile) I'm trying to find alternatives to equities and bonds that don't incur a huge amount of risk and it's hard to find that in commodities/resources... or is it? What other options other than property (and bonds) are there that have a similar low correlation to equities with a similar low volatility?

Even if a particular asset is very volatile, if it has a low correlation with the rest of the portfolio then a small amount will actually lower the overall risk. You should rebalance annually to get the full benefit.

For instance consider two portfolios:
Portfolio A: 100% Bonds
Portfolio B: 93% Bonds 7% Stocks

Because B holds uncorrelated assets it will be less volatile while having slightly higher long-term returns.

So you could use say a 5% exposure to gold or diversified commodities as a counterweight to your equities to get the benefit of an uncorrelated asset.

You can find more info on these ideas in William Bernsteins's book "The Intelligent Asset Allocator".