Tritax warns that as property funds move to 3rd place the sector showed its lowest rate of monthly change (0.47%) since the market turned in August 2009. According to the IMA property sector report for the month of June, £196m was invested - around double the amount for May.
Tritax is advising investors looking at commercial property to spread investment over a number of specific individual property investments, rather than investing into open ended funds. It is concerned that open ended fund’s ability to time their investment is determined by fund flows and not necessarily by properties that offer the best return prospects.
Anthony Wyld, head of marketing at Tritax, comments:
“Certain sectors within the commercial property sector still offer very good opportunities for capital growth and a good yield, especially if actively managed. However, collective funds are simply adapting their property acquisition strategy to reflect the rate of inflow of funds being received, which means often they are having to buy property regardless of whether it offers good value.
"This is particularly relevant during a period of low deposit rates as to hold investors’ equity in cash has a significant drag on the Fund’s performance. As retail investors are nearly always “behind the curve” by comparison with sector specialists it means that funds are almost inevitably “tail end buyers”
