Threadneedle Property Authorised Investment fund profile
Features + Contributors
What you and your clients need to know.
Look beyond London
By Cherry Reynard
Columbia Threadneedle fund manager profile
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By Holly Black
Introduction by Charlotte Richards - Investment Editor, Money Marketing
The role of property
in asset allocation
Find out more at Columbia Threadneedle
Property funds have seen stellar performance over the past few years. Both unit trust and investment trust returns have been rising, with some seeing increases of more than 50 per cent over three years.
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FE data shows the top performer in the sector over the past three years posted 56.5 per cent. Even over a turbulent last twelve months that saw equities briefly dip, the best performer managed returns of nearly 20 per cent. Some of the top performers have seen growth of more than 100 per cent when you look at their track record over the last five years.
However, fund sales over the past two years have not been reflective of such solid returns. According to figures from the Investment Association, sales for the Property sector saw outflows of £137m in 2017, following a staggering £1.8bn in 2016.
The reason for such huge outflows was largely due to the Brexit vote. Many funds were forced to stop withdrawals in the wake of the referendum, meaning investors were no longer able to access their money. Standard Life, Aviva and M&G were the first to suspend redemptions. But since then, the sector has recovered and, so far this year, there have been £239m net retail sales in the first quarter, suggesting that things may be changing for the space. The FCA has also since recognised that fund managers did not “adequately plan or have clear policies and procedures” for valuing property portfolios under stressed market conditions.
Property in general may seem complicated at first glance, but property funds make it a much easier asset to access. There are plenty of vehicles to use to access property easily these days. Unit trusts are by far the easiest, exchange-traded funds are available, Sipps are used to hold commercial property while others pick investment trusts – although the latter can still be somewhat illiquid. Direct property can of course be convoluted and is often highly illiquid, but investing in funds or trusts rather than bricks and mortar could provide a “safe haven” investment.
Opportunities for strong returns are clearly there but it is obviously more of a tough sell for advisers to their clients
Perhaps it is the illiquid nature that can be off-putting, but returns can almost start to speak for themselves.
By Cherry Reynard