guernsey-based vehicles aim to offer up to 7% income through commercial Holdings
Standard Life Investments (SLI) and Scottish Mutual are adding property funds to their respective ranges.
The offer period for Scottish Mutual's Commercial Property plan will run from 21 October to 20 December. Shares in the Guernsey-based income or growth vehicles can be bought at a discount of 99.5p before 22 November, while investments bought after this date will cost £1 per share.
Both the growth and the income funds will invest wholly in the Westbury Commercial Property fund. For every £1 received from investors, approximately £2 will be invested by the Commercial Property Funds in the Westbury fund. The gearing on the portfolios, which are Isable, will be provided by Abbey National.
The income option is targeting 7% gross, while the growth option involves providing capital growth from reinvested income, combined with underlying NAV growth, payable at the end of the 10 year term. Although not guaranteed, Scottish Mutual intends to offer an early encashment option after five years, at a price of 102p per share for the Income fund, and 140p for the Growth fund, provided the investments meet or exceed expected returns.
Initial commission of 4% and trail of 0.5%pa is available for nine years.
According to draft plans, the Standard Life UK Property Income fund, which is still subject to FSA approval, will be a Guernsey registered investment company listed on the London and Channel Island stock exchanges. It will hold UK income producing commercial properties in the office, retail and industrial sectors. The initial portfolio, worth around £400m, will contain 31 diversified UK commercial properties.
The target dividend yield is 6.5%pa. The initial fee will be 2.5% of initial gross assets and the annual fee will be 1.2%. SLI is also still awaiting FSA approval for its planned mid/small cap portfolio to be managed by Mark Niznik.
Expected to be offered by year end, the fund will be listed in the UK All Companies sector, and will likely hold between 80 to 90 stocks at launch.
In addition to the two funds, SLI is aiming to change the flagship of its UK range from its UK Equity Growth fund to its Growth & Income portfolio.
The £20m fund, managed by Euan Stirling and currently undergoing a ratings assessment, will be marketed as SLI's core UK offering as the size and performance of the fund is lifted.
Jacquie Kerr, investment director at Standard Life Investments, said the company hopes to double the size of the fund over the next year.
The fund, which has around 90 positions, is around 75% weight in the FTSE 100, although Stirling is favouring the mid-cap area of the market at the moment.
The UK Equity Growth has been SLI's flagship UK fund but its aggressive mandate, running with 30-35 holdings, has seen it suffer in the current market climate.
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