In its latest investment update, the wealth manager said it was now “more sanguine” on the prospects for commercial property funds and has returned to the asset class with a modest weighting in its cautious and balanced portfolios.
It has bought into the F&C UK Property, Henderson UK Property PAIF and Kames Property Income funds, which it said handled the “stress test” of summer 2016 well.
The Bristol-based firm, headed by managing director Gavin Haynes (pictured), sold its commercial property exposure in 2016 due to concerns over valuations, the effect of the Brexit vote and the impact of flows on the liquidity of funds.
“Following a number of meetings with UK property managers in recent weeks, we have returned to investing in the [commercial property] sector,” the investment team said.
“We have been encouraged by a more stable climate that has been boosted by a better-than-expected domestic economic backdrop and a weak sterling boosting demand from overseas investors.”
It added UK bricks and mortar commercial property funds have produced returns of 3 to 3.5% in 2017 so far, primarily from income.
The team said: “This recent move back into property is endemic of our view that with cash continuing to provide a negative real return, there are opportunities across asset classes that can provide more attractive long-term growth prospects and more attractive yields.
“A well diversified portfolio can provide many opportunities to exceed miserly cash returns for those prepared to ignore short-term noise, focus on valuations and take a longer-term perspective.”
Funds in the Investment Association Property sector, which includes all property funds not just commercial, have returned 4.5% since the start of 2017 according to data from FE Analytics.
