Square Mile has awarded new ratings to two property funds in November as the asset class presents an opportune entry point for investors.
Analysts at the firm identified Columbia Threadneedle’s £1bn Property Investment Trust as a compelling option for investors looking to maximise total returns, bestowing it an AA rating.
By investing in property across Europe, manager Marcus Phayre-Mudge has generated a total return of around 260.4% since taking charge in 2011.
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Yet performance has taken a downturn in recent years, with its share price falling 28.1% since its peak in late 2021.
Nevertheless, researchers at Square Mile commended Phayre-Mudge’s “proven ability in identifying undervalued assets with the potential to benefit from macroeconomic tailwinds,” noting that now might be an appealing time to consider the trust before performance recovers.
“It is an attractive option for investors seeking pan-European listed real estate exposure with the added diversification of a modest allocation to direct UK commercial property,” they added.
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Alternatively, Square Mile also highlighted the Legal & General Global Real Estate Dividend Index fund as another attractive way to bolster portfolio returns via the property.
This £991m fund provides more of a global exposure to the asset class by tracking the FTSE EPRA Nareit Developed Dividend Plus index, which consists of 300 REITs and real estate companies with one-year forecasted dividend yields of over 2%.
Most (68.4%) of these companies are concentrated in the US, but the remaining portfolio is diversified across the likes of Japan (7.3%), the UK (4.2%), and Australia (3.8%). Since tracking this index in 2016, the fund has made a return of 13.2%.
Analysts at Square Mile said the tracker fund deserved its new ‘recommended’ rating because of its “competitive price,” with the fund costing investors an ongoing charges figure of just 0.2%.
