Apollo Multi Asset Management’s Ryan Hughes says one of his funds’ best-performing holdings had been the Guernsey-incorporated Macau Property Opportunities, an investment trust listed on the London Stock Exchange, held in three of his funds for a number of years.
He said the fund, which targets niche developments in Macau and the Western Pearl River Delta, had been “our most successful investment by some margin”.
Reits
If investors are looking for domestically domiciled funds, real estate investment trusts could be an option.
In May, Rathbone Unit Trust Management’s David Coombs added property to his Multi Asset Total Return fund for the first time by backing the £238.9m Schroders Real Estate Investment Trust, a member of the Investment Adviser 100 Club of top-performing funds. At present the trust is trading at a marginal premium of 3 per cent, making it a less expensive investment than something like infrastructure.
Beyond bricks and mortar
Alternatively, some funds in the IMA Property sector invest in property-related shares rather than buying bricks and mortar.
The Henderson Horizon Pan European Property Equities fund – another member of the Investment Adviser 100 Club - is one such fund. Patrick Sumner has managed the fund since launch while Guy Barnard joined in September 2010. Since launch, the fund has delivered 62.6 per cent, less than its FTSE Epra Nareit Developed Europe index’s 74.3 per cent return but substantially more than the its peer group average.
Student accomodation
There are other alternative property sectors but advisers need to make sure they conduct strong due diligence for some of the more esoteric plays.
One property asset class which had become increasingly popular was student accommodation. While the pitch for this asset class usually mentions inevitable rent increases and ongoing demand – particularly in the major UK cities – some funds have had issues.
The Brandeaux Student Accommodation fund was due to list on the stockmarket this summer, but announced in July it had suspended such plans due to “adverse market conditions”. The company added its operations “remained unaffected” by the decision not to list stating that it would continue to run unimpeded.
The fund was previously suspended from trading in July 2013 due to concerns about liquidity. Brandeaux blamed the suspension on redemptions triggered by the FSA’s move in 2011 to ban the sale of unregulated products to retail investors.
Overseas property
Elsewhere, the Marbella Resort and Spa fund had hoped to raise £40m as part of a scheme to build a spa resort in the Spanish holiday destination, but after nearly a year of fundraising it had accrued just more than £1.1m.
