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Last week I took some time to analyse the property funds available to Irish Investors. I put together a client friendly report which discusses property funds as an investment option, this report will be updated on a quarterly basis and is available on request.

 

Property Funds are an excellent diversifier in portfolios heavily weighted to equities and bonds. The lack of correlation makes commercial property an important asset to consider as it can be used to reduce exposure to market fluctuations. Property funds are liquid investment vehicles and by investing in a property fund you avoid having to invest in physical bricks and mortar. You may access commercial property which may otherwise be restricted to large investors. A property fund investor benefits from pooled investments and reduced overall costs when compared to a direct property investment. It is important to note however that fund managers retain the right to impose deferral periods within the fund, which would prevent an investor from accessing their capital for a specified period of time.

 

I looked at the differences between the funds and with all fund comparisons it becomes clear what funds are more suitable to specific clients, taking into account the other components within their current portfolio, one property fund will not suit every client’s needs.  Property and equity are seen as a high risk asset, two of the six funds considered allow gearing as part of their fund strategy. Gearing allows the fund managers to borrow within the fund up to a specified level of the Gross Asset Value (GAV).

 

Each fund strategy outlines its targeted geographical locations for investment. Some of the funds add a level of diversification by investing in a number of locations to spread their risk. Where funds invest outside Eurozone countries currency hedging is an important consideration to reduces the impact of foreign exchange risk.

 

If you would like to discuss the content of this blog in more detail, or you would like a copy of our property report, please do not hesitate to contact us on 061-518365 or at info@metisireland.ie.

 

Niamh Breedy

Financial Planner