You are here: Home - Investing -

Investors pour back into property funds

0
Written by:
01/07/2014
Property funds saw their strongest month of inflow since December 2009 in May, according to the Investment Management Association (IMA).
Investors pour back into property funds

Monthly fund sales figures from the IMA revealed that while equities continued to be the best-selling asset class, with net retail sales of £558m, property placed second with £491m. The property sector hasn’t attracted equivalent flows since December 2009, when net retail sales reached £519m.

Jason Hollands, managing director at Bestinvest, said: “In our view this is an outcome of the desperate search for income.”

According to Hollands yields have been low across many asset classes – particularly fixed income – as a result of the monetary policy of recent years. 

He added: “Additionally, many investors will have undoubtedly been attracted by the strong uplift in capital values seen in the UK commercial property market over the last year as the economy has recovered and occupancy rates have improved in London and the South East.”

Yet Hollands questions whether returns in the property sector – forecasted by some managers to be in the region of 12-14 per cent in 2014 – will survive potential interest rate rises and policy tightening.

He said: “Like the residential property market, UK commercial property has benefitted from ultra-accommodative policies which have encouraged bank lending into the property sector – we would argue at the expense of allocating capital to other parts of the economy.

“Once interest rates start to rise, as they ultimately will, this could make for an altogether tougher environment as covenants – or restrictions on how land can be used – generally remain weak and occupancy rates in the UK regions have yet to match the recovery in the South of England.”

According to the IMA’s figures the UK Equity Income sector remained popular with £270m in sales, making it the second-most subscribed sector in May 2014. The Global sector came third with £248m.

Overall funds under management have increased year-on-year from £742bn in May 2013 to £801bn in May 2014. Net retail sales decreased from £2.1bn to £1.9bn over the same time period.

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week