Investment Trusts  

F&C property trust adopts cautious stance

F&C property trust adopts cautious stance

F&C Commercial Property Investment Trust has adopted a cautious approach despite modest out performance in the first half of 2017.

Richard Kirby, who runs the £1.3bn trust, said political risks and the disruptive impact of technology mean extracting more value from existing assets is the route to profit from property.

Mr Kirby said the performance of the fund was driven by better management of the existing portfolio of assets and he expects this, rather than buying or selling investments, to be the driver of returns from the commercial property market.

The F&C Commercial Property Investment Trust returned 8.8 per cent in the six months to the end of June compared with 8.2 per cent for the average fund in the AIC Direct Property UK sector in the same time period.

Mr Kirby said: “There remains considerable uncertainty surrounding the Brexit negotiations, the exit terms and the timeline for departure, and the general election result may have further complicated matters.

"Developments overseas, and the UK’s relationships with EU member states and the wider world, particularly the US and China, will be critical to the UK’s future economic success.

“The rapid changes taking place with regard to technology, infrastructure, working practices and shopping patterns will also affect relativities within property, presenting both opportunities and challenges.

"The markets have benefited from a prolonged period of low interest rates and although it is expected that changes will be well flagged and gradual, this could now start to become a greater factor in investment decisions.”

Four of the top 10 holdings in the F&C Commercial Property Investment Trust are in London and Mr Kirby said, given the political uncertainty, investors should focus on securing a reliable income stream from assets they already own.

He said: “While property valuations remain high, and competition from both domestic and foreign investors continues to be strong, the company will maintain its primary focus on adding value to the existing portfolio through asset management initiatives.”

david.thorpe@ft.com