F&C is launching its first open-end ended real estate fund as its faces losing the mandate for its £617m F&C Commercial Property trust (FCPT).
Co-managed by Julian Smith and Guy Glover of F&C REIT, the UK Property fund will invest in UK commercial property in what they believe is an attractive point in the market cycle.
The managers will build up a portfolio of new assets specifically chosen for the fund, aiming to provide a total return based on income and capital appreciation.
Risk will be managed through diversification at the sector, geographic, property and tenant levels. Additionally, the fund will retain a cash weighting of 10% to 20% to manage liquidity.
Smith says: "Market forecasters are currently predicting upgrades for 2010, while the sharp falls from 2008 and 2009 suggest that downside risk is considerably reduced.
"As the economy slowly recovers, we anticipate the demand for property will increase and, given low cash returns, we believe that the opportunity cost and yield for commercial property is very attractive."
The fund is structured as a Non-Ucits Retail Scheme (Nurs), with a minimum investment of £1,000. The initial charge is 5% and it carries an AMC of 1.5%. Commission is available at 3% with 0.5% trail.
F&C's only other property offering is FCPT, the board of which has agreed a takeover by the Ignis-run £728m UK Commercial Property trust.
The merger is still subject to shareholder approval and F&C is proposing an alternative plan which would see management of FCPT stay with its property managers.
F&C REIT was formed through the merger of REIT Asset Management and F&C Property Asset Management in 2008. It manages assets of £7.5bn.
Risk to retail investors
Joined as head of strategy, multi asset, in June
Group income protection