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Investment Association splits Property sector

UK_residential_propertyProperty funds in the UK are to be split into two sectors to reflect the fact investors can access property through direct investments or through securities.

The UK’s Investment Association (IA) is to split its Property investment funds sector to make it easier for investors to find information and make better comparisons.

A UK Direct Property sector and Property Other sector will be introduced from September 1 this year following a review that involved the Association of Real Estate Funds.

UK Direct Property will include funds that invest at least 70% on average over five-year rolling periods directly into UK property, including commercial and residential property, as well as student accommodation, leisure and healthcare assets.

Property Other will include funds that invest in property securities, direct funds with a specialist mandate, and hybrid funds. The number of funds in this sector will be reduced, which the IA said would make it easier for investors to conduct due diligence on this smaller pool of funds.

Property Other will include funds that invest at least 80% of their assets in property securities; or invest at least 80% in a mixture of direct property and property securities. It can also include funds that invest similar to UK Direct Property but which do not meet wider requirements of that sector.

Galina Dimitrova, director of investment and capital markets at the IA, said: “The creation of a UK Direct Property sector will make it easier for savers and their advisers to find information on funds investing in bricks and mortar assets based in the UK and make like-for-like comparisons on this asset type.”

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