Turnaround in private investor property funds

Some positive total returns have been recorded in private investor property funds as the sector benefits from a turnaround during the first quarter of this year.

In the final quarter of last year, investors lost confidence after the fall in property values so the fight back is a considerable swing for the sector.

The average return for the first quarter of 2008 for the seven largest authorised unit trusts property funds sold directly was around -1%, according to Trustnet, the fund information service.

According to the Association of Real Estate Funds, in the final quarter of last year, pooled property funds returned -9.1% with private investor funds being among the poorest performers.

In November, the value of Scottish Widows Investment Partnership’s (SWIP) portfolio fell by nearly 8%. However, it is now believed that the sector can provide positive returns through rental income and asset management.

The top two performers were the £942 million M&G Property Portfolio and the £998 million Scottish Widows Investment Partnership’s UK property Trust achieving total returns of 2.1% and 1.8% respectively.

Gerry Ferguson, manager of the SWIP fund said capital values seem to have stabilised. We are probably one of the higher-yielding funds, we have good-quality properties with good-quality rents.

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