Property funds are being regularly recommended to clients by the majority of advisers across the UK, according to a survey by Fidelity International.
The research shows, out of 313 advisers, 96% are now regularly recommending clients to invest in ‘bricks and mortar’ property funds, funds of commercial property securities including Real Estate Investment Trusts (Reits) as well as direct property investments.
Fidelity claims the survey shows 89% of advisers believe commercial property investment should account for at least 10% of a client’s portfolio, with nearly 40% saying it should make up more than a quarter.
Meanwhile, the survey also reveals while 82% of advisers have been typically recommending ‘bricks and mortar’ type funds, 14% are already recommending property securities funds, a figure which Fidelity expects to rise as Reits become more widely understood.
Other results reveal advisers believe they will recommend property funds to more of their clients in the future, with 40% of advisers claiming the most attractive feature of global securities funds is they offer diversification to equities and bonds, while a fifth says they offer diversification to the UK property market.
Peter Hicks, head of IFA channel at Fidelity International, says it is interesting to see the continued growing interest in property funds, from both advisers and investors.
He says many are clearly seeing this asset class as a good diversifier not only from residential property, but also cash, bonds and equity markets, adding it makes sense to have a percentage of your portfolio in this sector but warns it should be a balanced proportion.
Hicks adds: “With more funds offering access to global Reits, and the Government’s confirmation in the Budget of the launch of Reits in January 2007, we expect property securities to form a much larger part of commercial property investment for UK investors.”
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From 6 April 2019