Fund management house Gravis has launched an open-ended property fund which aims to provide a 4 per cent return by investing in UK property.
Gravis Advisory Ltd, a subsidiary of infrastructure giant Gravis Capital Management Ltd, announced the launch of the VT Gravis UK Listed Property Fund — the firm’s third open-ended fund — earlier this week (September 24).
The fund, which the firm described as a “unique addition” to the UK property fund sector, will be managed by Gravis’ newly appointed head of real estate securities, Matthew Norris, who joined from Grosvenor Europe earlier this month.
Gravis’ new fund will invest primarily in UK real estate investment trusts alongside property related closed-ended investment companies, corporate bonds and equities.
He said: “[The fund] will offer investors exposure to a diversified range of specialist UK real estate securities.
“It will focus on the UK property sectors supported by the most powerful current trends, which we identify as an ageing population, urbanisation, technological development, and changing residential requirements.
“Each of these trends is changing the real estate landscape and creating new opportunities for investors.”
The fund will offer daily dealing — so investors can get their money back every day — and will aim to reduce the risk of gating by investing in REITs rather than stand alone properties.
REITs are investment trusts that invest in real estate instead of company shares, so allow consumers to invest in property without becoming a property owner themselves.
REITs are structurally suited to provide liquid access to an illiquid asset class like property and are therefore able to focus on long-term portfolio returns.
Managing director of Gravis Advisory Limited, William MacLeod, said: “We are excited about this new fund that we believe will offer investors peace of mind when investing in this vital asset class.
“[The fund] will provide exposure to the strongest trends in the real estate market that have already arguably changed the investment landscape forever.”
The fund will initially launch with an offer period which will run from October 1 – October 31 during which £1 is the starting price.
From November 1, the fund will start trading so the unit price will depend on the investments’ performance.
The fund will be available on all major platforms and directly with a minimum investment of £100 at a management fee of 0.7 per cent.
Scott Gallacher, chartered financial planner at Rowley Turton, said: “REITs offer a degree of diversification from the traditional asset classes of equities and bonds so consequently a REIT fund might be attractive to some investors.
“I do have concerns about whether or not the fund can add sufficient value to offset adding an additional layer of charges, such as the REIT fund’s 0.7 per cent additional management charge.
“There’s also the question of whether or not it’s the best time to be investing in UK property, especially given the concerns around Brexit. Perhaps it’s an idea to wait and see how that develops before investing in UK property.”