A decade ago, a standard real estate investment portfolio was up to 50% exposed to retail properties (in other words shops) - or so we are told. The next-largest allocation was offices. But the retail and office sub-sectors of property investment face challenges.
Tom Walker, a Schroders property fund manager, thinks these challenges are, to some extent, behind the recent suspension of trading in an M&G Investments UK real estate fund.
As well as how a modern property portfolio should be allocated between sub-sectors, the suspension brings up two other issues. The first is the role of Brexit in UK real estate investment (which is not that much, Walker feels, at least in the case of M&G). The second is - and hardly for the first time over the past 12 months – the issue of liquidity in funds investing in less liquid investments.
Real estate funds have been the source of some stellar returns recently, as our article shows. With investor allocations to property expected to grow, how to obtain exposure will become a major talking point in the early part of this new decade.
Nick Fitzpatrick, Group Editor, Funds Europe
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