Fund managers running global investment mandates see property funds as a bright spot in the UK, as the sector continues to perform well.
The Investment Association Property sector has returned 5 per cent over the last year, and 25 per cent over the last three years.
Simon Edelsten, who runs the £151m Mid Wynd Investment Trust, has generally got very little invested in the UK market, preferring the US, where over a third of his capital is deployed.
But he said in the sliver of UK shares he holds, these include property, which have helped the Mid Wynd Investment Trust return 70 per cent over the past three years, compared with 54 per cent for the average trust in the AIC Global sector in the same time period.
Mr. Edelsten is invested in Segro, which is the owner of industrial warehouse property, and Secure Income REIT, which he said tends to own assets in the healthcare and leisure sectors that are on long leases.
More broadly, however, he was pessimistic about the prospects for UK investments. He told FTAdviser: "The UK doesn't look that good value to our way of adding up.”
Across both of the funds he manages, those shares are the only holdings he owns that are exposed to the UK economy and listed in the UK.
The fund manager is also invested in Prudential shares, but owns those because of the company’s substantial revenue streams from Asia.
Mr. Edelsten said he takes the view they are “a bit special and the growth is secular which should avoid UK problems likely to occur over the next five years".
Another global investor with a focus on UK property is James Sullivan, who runs the £70m Coram Global Balanced fund. He said he feels many parts of the UK property universe have been more than pricing in a period of “economic unrest” in the UK.
The UK property share on which he is most keen is Land Securities. Mr Sullivan admitted the shares have been such poor performers since the UK’s vote to leave the EU it would have been better to deploy the capital invested in these shares into a passive investment such as a tracker fund.
But Mr. Sullivan retains faith in the stock. He said the shares presently trade at a sufficient discount to represent the chance to buy “£1 worth of assets for 61p.”
The fund manager commented: “A number of UK Reits are incredibly appealing and represent for the medium term investor, some potentially meaningful gains. None more so, in our opinion, than (British Land)”.
