There seems to be something about property funds’ association with ‘real bricks and mortar’ that reassures investors, perhaps irrationally.
Even after a global financial crisis which was triggered in large part by property, or reckless lending against property to be more precise, investors have not shunned the asset class.
Then there is the fact that a large proportion of many property funds, often the majority, is made up of real estate linked equities or bonds, not bricks and mortar anyway.
The counter to this line of thought stems from historical precedent according to some.
Head of property equities at F&C Marcus Phayre-Mudge is in this camp, and remains bullish. Speaking to Portfolio Adviser during the PA Summer Congress 2015, he said looking back over previous cycles, rising rates have not necessarily been bad for real estate providing they are rising for the right reasons; i.e. central banks are keeping inflation in check in growing, healthy economy.
It will be interesting to see how property does react when the rate rises kick in or if Greece exits the euro, and whether the asset class is still riding high at the top of the charts when the IA puts out its next set of monthly numbers.
