Double Returns at Property Securities Funds - Research

Stephen Harris

30 January 2007

Analysis by Fidelity International reveals that property securities funds fared extremely well in 2006, with the average fund delivering 37.86 per cent - a return double that of the average bricks and mortar fund which returned 17.9 per cent. The analysis also shows that, while most directly invested property funds limit exposure primarily to the UK, property securities funds tend to be more diversified across the world with an average weighting of around 30 per cent in the UK. Because the correlation of the world’s property markets is low, property securities funds investors benefit from greater diversification, say Fidelity. Despite the investment story around performance, diversification and liquidity offered by property securities funds being extremely compelling, in 2006 many UK investors instead opted for bricks and mortar funds. Estimated net sales over 2006 for the two are remarkably different, with inflows into bricks and mortar funds of £3.5 billion outpacing inflows into property security funds of £486 million by a long way.