Property investments are still perform strongly despite stock market volatility
Investments in property have outperformed UK equities and bonds over the past year due to a low correlation between property and the stock market.
UK property yields have not fallen in line with the movements in equities and gilts markets and thus the yield differential is larger now than it has been for many years. For example the average running yield on all UK property is 7.5%. In comparison, the average dividend yield is around 2.5% and the average 10 year Government Bond yield is around 5.1%.
Over a one year period some funds are showing strong growth according to Standard & Poor's, particularly funds investing in US properties.
The top three over one year are the Morgan Stanley Dean Witter US real Estate fund achieving a return of 23.47%.
This is followed by the Deka Team Immoflex USA fund with a one year return of 21.5%.
In joint third position is the Amadeus US real estate Sec fund and the Pioneer US real estate fund with returns of 20.96%.
Property values are expected to rise in the future and there is presently strong investor sentiment in the UK property market, in particular.
Glanmore Property fund domiciled in Guernsey invests only in UK properties. All properties in their portfolio consists of commercial, government, banks and public companies.
Investments are not short term and the minimum time recommended for someone to invest in the fund is two years.
The product is sold either through intermediaries or as Self Administered Superannuation Schemes (SASS). The strategy for the fund is risk adverse.
There are monthly dealings and investors can join and leave once a month. The fund has shown a return of 15.57% over three years to 1 April 2001, according to Standard & Poor's figures.
If an investor wants to redeem part or all of their investment, Glanmore can borrow up to 25% net asset value from the bank, so properties are not sold immediately. The fund invests directly in the properties they manage. Other types of funds can invest indirectly into property through the stock market.
ABN Amro has five funds that invest indirectly in property equities. Four are based in Amsterdam and include Global, European, Far East and American.
The ABN Amro Global Property Fund has returned 20% per annum according to the group, although figures for Standard & Poor's are not available. It aims to offer investors a stable income with the potential for growth given the long term nature of most lease contracts.
The investment strategy used is a combination of top-down and bottom up analysis. The top down approach considers the overall economy, job growth, direct property markets and household formation patterns
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