Commercial Property Making a Comeback
26 Jan 2010
After last weeks announcement by Henderson New Star that their much maligned International Property Fund is due to start dealing on a daily basis from 12th February 2010, does this move show that the asset class is finally turning the corner?
The world of investing has a habit of creating a flavour of the month every so often, mainly because many still see past performance as a guarantee of future returns. One such flavour of the month was hit particularly hard by the Credit Crunch, but signs of a recovery have now started to appear.
Commercial Property was a must-have for any experienced investor back in its heyday in 2007, however, by July 2009 the sector had hit its low point.
There is no greater example of the sectors fall from grace than that of the Henderson New Star International Property Fund, which suspended trading on 25th November 2008 due to liquidity problems.
The Property Sector now appears to be turning a corner, albeit well behind and much slower than the recoveries seen in other asset classes, posting a return of 8.62%* in the year to 31st December 2009. But does this signal that the good times are back for commercial property?
There is no doubt that Commercial Property is heading in the right direction, but doubts must still remain about the asset class in the short to medium term. Many property companies still have large debts to repay, which will impact upon their financial performance. Walk along your local high street and you will still see many empty shops and office spaces.
No-one would argue against commercial property remaining an important element of an investment portfolio, but it's hard for many investors to see past other asset classes that are outperforming property at a considerable rate.
We feel the key to property investing at this point is to make the right choice of fund and balance your portfolio to suit your risk profile at this point in time.
If you are considering adding Property to your fund portfolio, we have two funds on our Heroes List you may wish to take a look at. Fidelity's Global Property Fund and Threadneedle's UK Property Fund have both met the requirements of our Investment Committee. For more information on these funds and to invest, please click the links below. Alternatively, you can call the TQ Invest Team on 0800 294 7221.
Author: Robert Chamberlain
*Source: Trustnet. Price total return performance figures are calculated on a bid price to bid price basis (mid to mid for OEICs) with net income (dividends) reinvested. The value of investments and the income from them can go down as well as up. Past performance should not be regarded as a guide to the future. The investments described may not be suitable for all recipients and this content does not constitute personalised investment advice. Torquil Clark Ltd can take no responsibility for investment decisions you may take as a result of this website.
