Talking Point  

The role of property in a portfolio

  • Identify effect of Coronavirus on global markets in immediate term
  • Explain the pros and cons of property investments
  • Explain the liquidity challenges of property investments
CPD
Approx.30min
THE ROLE OF PROPERTY IN A DIVERSIFIED PORTFOLIO
How advisers can consider property when building a portfolio
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The US-China trade deal announced in mid-December was expected to bring some much needed calm to the markets, following two years of tensions.

But within just a few short weeks, the much-reported war of words between the US and China, along with the US-Iran tensions has been eclipsed by a much bigger threat. 

The Coronavirus (Covid-19) outbreak is causing global markets to react in varying degrees of distress.

This has led to an increase in short-term volatility and has left investors concerned over how slowing economic growth in China, at least in the near-term, could spread to the rest of the world.

A key question for investors tackling market volatility triggered by the Covid-19 outbreak is whether the impact will be short-lived or will mark a longer-term inflection point for the global economy - perhaps even a recession.

And given that other asset classes are more correlated, such as bonds and equities due to quantitative easing, people are looking to other asset classes for diversification - property being one.

But as an investment option, property is not perceived as very liquid, with some property funds having had to gate in recent months.

So how can property work in a portfolio and can it help with diversification?

The report, which can be read by clicking the link in the image above, qualifies for an indicative 30 minutes' worth of CPD.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. True or false, property, like infrastructure and other real assets, can also protect investors from a break-out in inflation.

  2. True or false, investment trusts are better suited to hold illiquid assets but can find themselves exposed to share price volatility?

  3. According to Rory McPherson, why does he believe that for now some closed-ended funds in the sector may look expensive, despite the share price woes in this space?

  4. Sterling has been weak against other developed market currencies so far this year, but could strengthen in the event of any breakthrough in trade talks between the UK and EU. This would lead to investors:

  5. What evidence is there to show that property can hold its own as a diversifying asset?

  6. Why have investors grown sceptical about property?

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

  • Identify effect of Coronavirus on global markets in immediate term
  • Explain the pros and cons of property investments
  • Explain the liquidity challenges of property investments

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