Thoughts re property funds?

Aged

What about FE fundinfo Crown Ratings? Are these a reliable indicator of whether a fund is a good or a bad one?

Prism

I would say not. 

You need to decide what you want from property. If you want a general exposure then any of the funds or ETFs that track the global or possibly UK property indexes are fine. They simply hold a big bunch of REITs.

If you are looking for something that holds direct property then research the individual REITs and decide what type of property you are after - retail, offices, supermarkets, logistics, care homes etc

dunstonh

Aged said:

What about FE fundinfo Crown Ratings? Are these a reliable indicator of whether a fund is a good or a bad one?

Totally unreliable.  They are often out-of-date, too biased towards short-term performance, and linger on way past the point they should have been dropped.  Doesn't include funds that haven't paid money to be reviewed.

redpete

P2P investments for property loans can be a way of having 'property' in your portfolio.  Far from low risk given the number of failed platforms recently.  I use Loanpad, it gives modest return, 4.9% for me at the moment, low number of defaults, reasonable LTV, no 'cash drag' for investors (money in account not yet allocated to loans and hence not earning interest).

Aged

Having now carried out some research, investment trusts don't seem appropriate for my circumstances ie to hold in a pension wrapper along with a bunch of existing OEIC funds, all of which are accumulation units. The goal is to preserve and hopefully grow my investment in the run up to my official retirement age, at which point I will begin to draw income from it. I believe a REIT would be a better fit, but apparently there are tax issues to consider with REITs that do not arise when investing directly in property. 

masonic

Aged said:

Having now carried out some research, investment trusts don't seem appropriate for my circumstances ie to hold in a pension wrapper along with a bunch of existing OEIC funds, all of which are accumulation units. The goal is to preserve and hopefully grow my investment in the run up to my official retirement age, at which point I will begin to draw income from it. I believe a REIT would be a better fit, but apparently there are tax issues to consider with REITs that do not arise when investing directly in property. 

Tax issues? I hold a couple of REITs and cannot think what those could be. As you'd be holding in a pension wrapper I'm confused as to how there could be tax issues associated with any UK investment fund. I know offshore property funds can have complex tax treatment. Then again, I don't understand your comment about investment trusts being inappropriate to hold in your pension wrapper. Is that just because ITs may pay a dividend whereas your other funds do not?

Aged

masonic said:

Aged said:

Having now carried out some research, investment trusts don't seem appropriate for my circumstances ie to hold in a pension wrapper along with a bunch of existing OEIC funds, all of which are accumulation units. The goal is to preserve and hopefully grow my investment in the run up to my official retirement age, at which point I will begin to draw income from it. I believe a REIT would be a better fit, but apparently there are tax issues to consider with REITs that do not arise when investing directly in property. 

Tax issues? I hold a couple of REITs and cannot think what those could be. As you'd be holding in a pension wrapper I'm confused as to how there could be tax issues associated with any UK investment fund. I know offshore property funds can have complex tax treatment. Then again, I don't understand your comment about investment trusts being inappropriate to hold in your pension wrapper. Is that just because ITs may pay a dividend whereas your other funds do not?

I read somewhere that some distributions re REITs are paid after deducting withholding tax at the basic rate, which makes no difference if you're taxable at the basic rate but has implications for higher rate taxpayers and non-taxpayers?

Yes, my comment re investment trusts relates to dividends being paid out rather than accumulating in the fund, if my understanding of how it works is correct?

masonic

Aged said:

masonic said:

Aged said:

Having now carried out some research, investment trusts don't seem appropriate for my circumstances ie to hold in a pension wrapper along with a bunch of existing OEIC funds, all of which are accumulation units. The goal is to preserve and hopefully grow my investment in the run up to my official retirement age, at which point I will begin to draw income from it. I believe a REIT would be a better fit, but apparently there are tax issues to consider with REITs that do not arise when investing directly in property. 

Tax issues? I hold a couple of REITs and cannot think what those could be. As you'd be holding in a pension wrapper I'm confused as to how there could be tax issues associated with any UK investment fund. I know offshore property funds can have complex tax treatment. Then again, I don't understand your comment about investment trusts being inappropriate to hold in your pension wrapper. Is that just because ITs may pay a dividend whereas your other funds do not?

I read somewhere that some distributions re REITs are paid after deducting withholding tax at the basic rate, which makes no difference if you're taxable at the basic rate but has implications for higher rate taxpayers and non-taxpayers?

REITs held in either an ISA or UK pension scheme qualify for gross payment of property income distributions, and these are tax exempt due to the wrapper. So I don't think those concerns are relevant to your situation of wishing to hold in a pension.

Aged said:
Yes, my comment re investment trusts relates to dividends being paid out rather than accumulating in the fund, if my understanding of how it works is correct?

Yes, you'll receive distributions, so you would need a dividend reinvestment instruction if you wanted the income reinvested. If your pension doesn't support this, then it is a minor inconvenience that some uninvested cash must be periodically swept up and invested manually. Perhaps not a deal-breaker.

wmb194

Aged said:

Having now carried out some research, investment trusts don't seem appropriate for my circumstances ie to hold in a pension wrapper along with a bunch of existing OEIC funds, all of which are accumulation units. The goal is to preserve and hopefully grow my investment in the run up to my official retirement age, at which point I will begin to draw income from it. I believe a REIT would be a better fit, but apparently there are tax issues to consider with REITs that do not arise when investing directly in property. 

A REIT* is an investment trust, just a different type with different rules on e.g., how transactions in their portfolios are taxed and how distributions are made, categorised - usually as interest and/or property income distributions (PID) - and taxed, though in this instance this isn't an issue. 

They still have the same basic characteristics of all ITs but you need to be careful of REITs in particular as they tend to use a lot more leverage than ordinary ITs. For instance, look at the trouble British Land got itself into during the financial crisis: it required a big capital raise to keep it going but fortunately it appears to be run much more cautiously now. Due to rising interest rates on debt there have also been concerns about the sustainability of some REITs' dividends. Investing in these things is a lot closer to investing in individual companies than in an IT or OEIC investing in the shares of a range of FTSE350 companies.

https://www.proactiveinvestors.co.uk/companies/news/3030/british-land-announces-deeply-discounted-rights-issue-4383.html

https://citywire.com/investment-trust-insider/news/numis-the-uk-reits-feeling-the-heat-from-rising-rates/a2392268

*Real Estate Investment Trust

Aged

masonic said:

REITs held in either an ISA or UK pension scheme qualify for gross payment of property income distributions, and these are tax exempt due to the wrapper. So I don't think those concerns are relevant to your situation of wishing to hold in a pension.

Does 'UK pension scheme' = a SIPP?