Just Do It: SIPP’s

Article 3 – April 2010

Investing in Property Funds

There are many different assets classes in which one can invest. However when looking at your portfolio and whatever your attitude to risk it is important that you hold assets across a number of different asset classes. The main ones are Cash, Property, Bonds and Equities.

Your attitude to risk will determine your weighting in each asset class. For example, as a cautious investor a large percentage of your investment portfolio would be in cash or cash based funds which would provide low risk and less potential for higher returns.

For the more adventurous investors, a smaller percentage may be invested in cash based investments; however these portfolios would have the potential for larger returns.

Whatever your risk profile it is important that you invest monies across different asset classes to ensure whilst one class is not performing you are making a return in other areas.

With Property there are different ways to invest, the normal route by buying and investing directly in residential or commercial property or by investing in Property funds.

One of the most common ways to invest in property funds is through pooled or collective and pensions investments whereby many investors contribute to one fund which is managed professionally.

Property funds aim to achieve growth by investing in portfolios of commercial premises from offices, factory, retail outlets & warehouses.

A few years ago there was a surge in investing in commercial property funds and marketing campaigns began to attract more. The commercial property market reached its height in June 2007.

However, when it was realised that Britain’s economy could not support soaring commercial property values, fund prices began to plummet and continued for most 2008 & 2009.

2009 saw recovery in the later part of the year and now investors have started to invest again into this market. In fact Property funds were the most popular sector for investors last October and November according to the Investment Management Association accounting for one sixth of new money invested.

In summary property funds hit a peak in June 07 and bottomed out in July 09, however they have come back on average 8.8% since July and investors now see the prospect of getting assets at a good price.
Remember past performance is not a guide to future returns. The value of investments and the income from them can go down as well as up..
For Independent Investment Advice please email elaine.porter@justdoproperty.co.uk