Fund Offers Safer Way To Diversify
Sydney Morning Herald
Saturday October 11, 2008
A NEW vehicle, the LMWI Diversified Property Fund, has been established to give investors an alternative entry into the sharemarket, without having to buy directly into the individual real estate investment trusts.
Amid the volatility, investors appear more confident to allow a manager to take charge of a portion of funds and allocate them into the unlisted and managed funds side of the market, to even out sharemarket fluctuations. LMW Invest's executive director, funds management, Michael Este, said the new fund would seek to capitalise on the opportunities opening up in commercial property investment markets. "While it is true that no one rings a bell at the bottom of the market, it is certainly at a low point. As a result, we believe the pricing of securities in the unlisted property market will soon present some attractive investment opportunities," Mr Este said. "The fund carries a target investment mix of Australian listed property (30 per cent), international listed property (25 per cent), Australian unlisted property (40 per cent) and cash (5 per cent). The investment mix allows access to a range of domestic and international assets that may not be available to many individual investors." Another manager, Australian Unity Investments (AUI), is also aiming to offer investors a more varied vehicle and is seeking investor approval to convert five of its existing retail property syndicates and trusts into a single fund, worth about $400 million.Under the proposal, AUI will create a retail property fund it claims would be one of Australia's largest unlisted retail property funds, initially holding seven properties in NSW, Queensland, Western Australia and Victoria. Martin Hession, head of property at AUI, said the proposal would be voted on by investors at meetings at the end of November. "We have put forward this proposal now, even though the majority of our syndicates won't reach the end of their investment terms for several years, because we believe it is in the best interests of investors, providing improved liquidity and diversification, better capital management outcomes, and reduced income volatility," he said. "At the same time, investors will retain an interest in properties that have delivered excellent returns for them over a number of years. "While the syndicate structure has worked well in the past, it always had limitations that, in the current market, can cause concern for investors, particularly liquidity." Research confirmed that fixed-term syndicates were no longer as popular or as desirable for investors, Mr Hession said.
© 2008 Sydney Morning Herald
