Commercial Property Funds

copper2gold

Hello all,

I have invested in a property fund - the Zurich Sterling. It has been doing very well, and is still making good returns. I am more interested in income than growth.

With the current climate being volatile, and as we hear that another property fund, the Scottish Equitable, has lost a lot of money and temporarily closed its exit doors, I am wondering whether I should get out of Sterling while I still can?

The Sterling fund is a lot bigger than the S.E., and over the last couple of months the managers have been taking steps to maintain as much stability as possible.

Your thoughts?

Thanks

dunstonh

With the current climate being volatile, and as we hear that another property fund, the Scottish Equitable, has lost a lot of money and temporarily closed its exit doors, I am wondering whether I should get out of Sterling while I still can?

If you are 100% into property funds then that is a bad strategy which by luck more than anything has done well upto mid 2007. So, rebalancing the portfolio to be better diversified makes sense.

Sterling offer many funds, including a wide range of external managers and switching is free of charge. So no reason to not do it.

The general feeling is that the property fund decline is coming to an end. There may still be a few months of smaller drops but the worst appears to have passed. Some are now predicting that 2008 will see gains in the property fund sector.

Of course, nobody knows but if you are not already out of property then you have probably left it too late and it may well be time to start looking to re-enter it within a month or two.

Franko43

Yeoouchh...http://www.guardian.co.uk/business/2008/jan/18/newstarassetmanagementgroup.equities


I'm down 20% from my initial investment in a Property fund last year but am going to stick with it

purch

Because of it's very nature, and the lack of liquidity which gets exacerbated as you reach the peak or trough of the market, Property also seems to overshoot on both the upside and downside....which is why when the bubble bursts it tends to be painful and the landing is invariably hard

Just as a lot of commentators were calling for the market to have reached it's top a couple of years ago, and it still went up further I would expect the market to continue to be tough for a while longer than many commentators expect/predict/guess


PS. This is what Trustnet has for the Zurich Sterling Property Fund

http://www.trustnet.co.uk/life/funds/?fund=5843

Not exactly 'stellar' performance against it's peer group

SilverScooby

There was some interesting chat yesterday on Financial Times Alphaville that there's a short term rally at the moment but Morgan Stanley expect things to relly bomb in the summer:

"So what are Morgan Stanley saying??
NH: they are advising clients to switch out of European property stocks (which tend to be more highly geared) into their UK rivals
NH: because of the possibility of an interest rate cut driven rally in the UK, which will leave its continental peers behind
NH: because of the possibility of an interest rate cut driven rally in the UK, which will leave its continental peers behind
NH: here’s the note
NH: it’s by Martin Allen
NH: one of the sector’s more respected analysts
NH: UK Property Shares - It’s So Bad, It’s Good
NH: We have upgraded our pan-European industry view to Attractive from Cautious for 1H08e, and recommend that property share investors overweight the UK relative to continental Europe for this period on the prospect of a 20%+ bounce in share prices.
NH: In line with this we upgrade the laggards of 2007, British Land, Brixton, SEGRO, to Overweight from UW, downgrade last year’s most defensive UK major, Liberty International, to Underweight from OW
NH: We expect a short, sharp, counter-trend rally in UK property shares in 1H08, but remain very bearish on a two-year view. We expect UK property to climb by at least 20% in 1H08 as the Bank of England is forced to cut UK base rates by around 100 basis points in an attempt to avert a recession.
NH: We anticipate that once this counter-trend rally has run its course, say in
mid-2008, UK property shares could approximately halve in value over the following 18 months as an economic recession drags down market rents and precipitates the insolvency of many highly leveraged investors.

PM: Hmm — so he is not actually that positive!
PM: Sharp rally will be followed by a real collapse
PM:
PM: : Jump back in while the BoE cuts rates
PM: then sell it"


There has been a rally in commercial property this week - my one good pick (most of my stuff is down with the general market falls) was Savills at 246p, now 312p

copper2gold

Thanks dun,

I am looking at a partial switch within Sterling, I just hope I haven't left it too late. Do you know of any useful links which would outline all their options and returns? The main Zurich site doesn't seem to give me the info I want.
I like your optimism about the property fund decline ending soon :T

Thanks for your advice,

c2g

copper2gold

Purch, you are right, it hasn't performed well at all recently - quite the opposite. Silver Scooby - ouch! The good news before the bad!

Thanks, both of you.
c2g

SilverScooby wrote: »

There was some interesting chat yesterday on Financial Times Alphaville that there's a short term rally at the moment but Morgan Stanley expect things to relly bomb in the summer:

"So what are Morgan Stanley saying??
NH: they are advising clients to switch out of European property stocks (which tend to be more highly geared) into their UK rivals
NH: because of the possibility of an interest rate cut driven rally in the UK, which will leave its continental peers behind
NH: because of the possibility of an interest rate cut driven rally in the UK, which will leave its continental peers behind
NH: here’s the note
NH: it’s by Martin Allen
NH: one of the sector’s more respected analysts
NH: UK Property Shares - It’s So Bad, It’s Good
NH: We have upgraded our pan-European industry view to Attractive from Cautious for 1H08e, and recommend that property share investors overweight the UK relative to continental Europe for this period on the prospect of a 20%+ bounce in share prices.
NH: In line with this we upgrade the laggards of 2007, British Land, Brixton, SEGRO, to Overweight from UW, downgrade last year’s most defensive UK major, Liberty International, to Underweight from OW
NH: We expect a short, sharp, counter-trend rally in UK property shares in 1H08, but remain very bearish on a two-year view. We expect UK property to climb by at least 20% in 1H08 as the Bank of England is forced to cut UK base rates by around 100 basis points in an attempt to avert a recession.
NH: We anticipate that once this counter-trend rally has run its course, say in
mid-2008, UK property shares could approximately halve in value over the following 18 months as an economic recession drags down market rents and precipitates the insolvency of many highly leveraged investors.

PM: Hmm — so he is not actually that positive!
PM: Sharp rally will be followed by a real collapse
PM:
PM: : Jump back in while the BoE cuts rates
PM: then sell it"


There has been a rally in commercial property this week - my one good pick (most of my stuff is down with the general market falls) was Savills at 246p, now 312p

dunstonh

It is worth noting that property shares funds and bricks and mortar property funds are different beasts.

copper2gold

OK. Is that good or bad for me?

dunstonh wrote: »

It is worth noting that property shares funds and bricks and mortar property funds are different beasts.