Top 5/Bottom 5: Property funds

Property has had a rough ride over the past decade. With the global credit crisis and collapsing house prices, it has had a long path to some form of recovery.

It is fair to say that most of the growth in recent years has centred on London. Property prices have been gathering momentum in the capital, but rental yields elsewhere in the country remain volatile. However, one property manager said recently that high London property yields are unsustainable, providing a warning that investors should not be get caught up in a flurry of activity.

That said, several property funds have been doing well over the past 12 months. As shown in the table below, the top performer – the Aberdeen Property Share fund – returned an impressive £1,341 on an initial £1,000. With a 70.5 per cent exposure to real estate, this fund is focusing heavily on a particular area to make its money.

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This level of performance is the exception rather than the norm, however, with the average fund returning £1,097. The lowest performer was the Aviva Investors Property Investment fund at £931, however the fund’s stated objective is to achieve consistent income and its 12-month yield was 5.56 per cent.

According to the IMA, funds in the Property sector must invest at least 60 per cent of their assets directly in property or 80 per cent in property securities. If the former falls below the threshold, it must invest a sufficient amount of the balance of its assets to ensure 80 per cent of the fund is invested in property, where it becomes a hybrid fund.

Best and worst property funds one year to 8 July 2013
Top 5
Aberdeen Property Share A£1,341
Henderson Horizon Asia Pac Prpty A1£1,335
First State Asian Property Sec A Inc£1,262
Henderson Horizon Pan Eurp Prpty Eqs A1£1,250
Premier Pan Europe Prop Share A Inc£1,232
Bottom 5
Aviva Investors Property Investment£931
Aviva Investors Asia Pacific Prpty A£952
HC FCM Salamanca Glbl Prpty 1 Std GBP£965
Scottish Widows HIFML UK Property 1£980
Threadneedle UK Property Trust Inc£993
Sector average£1,097
Figures as at 8 July 2013, based on £1,000 initial investment. Source: Morningstar