Brexit: this is the one word which summarises why investors should have been diversified across the wealth of global property, a Schroders fund manager has claimed.
Tom Walker, co-head of the Schroder Global Cities Real Estate Fund, told FTAdviser the main argument for having a globally diverse exposure to property within a portfolio could be summed up in one word: “Brexit”.
He said: “If you had all your eggs in one basket and you had just held UK commercial real estate [at the time of the vote to leave the European Union], you would be questioning that decision right now.
“We have approximately 10 per cent of our fund in the UK and 90 per cent invested elsewhere around the world.
“It is all about diversification. You could say 10 per cent of our fund had a bad Brexit, but 90 per cent of it had a very good Brexit.”
On 1 August, a letter was sent out to investors informing them the name of the fund Mr Walker and his co-head Hugo Machin run had changed from Schroder Global Real Estate Securities to Schroder Global Cities Real Estate Securities.
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A letter sent out to investors, seen by FTAdviser, said: “We believe the strongest global cities will grow, in economic terms, faster than small cities and regions.
“Seventy per cent of the fund’s investments are exposed to companies that invest significantly in real estate in the top 30 cities in the world (as ranked by our proprietary Global Cities database).”
When asked why the name changed, Mr Walker said: “The name ‘Global Cities’ is the best descriptor of what we do. We are looking for the powerful economic cetnres around the world and we think these are global cities.”
These are broadly defined, he said, as those cities which will continue to create more jobs than both the other cities and regions in the countries in which they are located.
To find these hotspots, Mr Walker says he has a team of people located around the world, as well as following strict investment criteria, much of which is grounded in the Schroders Global Cities 30 Index, which is the company’s ranking of cities around the world, based on various factors.
He explained: “If we can find a company which owns assets in a global city, with a very good management team that own shares in the company they are running, as well as having a strong balance sheet, then this has the ingredients for us to consider it within the portfolio”.
simoney.kyriakou@ft.com
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