Property fund converts to Property Authorised Investment Fund structure, the first to do so under FSA rules

News - Trusts

Written by Ray Clancy

Wednesday, 09 June 2010 12:00

Royal London Asset Management has converted its Royal London Exempt Property Unit Trust to a Property Authorised Investment Fund structure with the aim of attracting a broader range of investors.

It is hoped that multi managers and wealth managers will take a look and corporate clients, such as insurance companies, will also be able to invest through a feeder fund, the Royal London Property Trust.

This is the first time an existing property fund has been converted to a PAIF since these vehicles were introduced by the FSA in 2008. Importantly, this means that investors will have immediate access to pool of diversified property assets, the company said.

By broadening the appeal of the fund and attracting potential new investors, an increase in the fund’s size will allow the team to take advantage of larger investment opportunities, it claimed.

In addition, as the fund is now an open-ended investment company (OEIC) it has access to a wider range of non-physical property assets including REITs, ETFs and other collective investment vehicles, helping to enhance diversification.

It said that the investment objective and policy of the PAIF remain similar to the RLEPUT, investing in a broad spread of commercial properties across the UK. The fund therefore maintains its existing track record. Performance has been very strong, with the fund consistently ahead of the sector average for balanced property unit trusts. Over one year it has returned 14.3% against a peer group average of 10.9% and year to date is up 5.8% against 4.9% for the sector average.

‘The conversion to a PAIF structure is an important step in the development of our property capabilities and reaction from existing clients has been very positive. Significantly, we can now market our excellent reputation for property investment to a broader group of investors who will benefit from the greater investment opportunities open to the management team,’ said Susan Spiller, RLAM’s Head of Marketing.

Fund Manager, Stephen Elliott, added; ‘We are convinced of the benefits of active fund management and the potential to add value for our investors, particularly against the current backdrop of market volatility. The broader appeal of our fund as a PAIF is an exciting development for us and we look forward to demonstrating the success of our philosophy and process to a greater number of potential investors.’