Property has long been recognised as a solid long-term investment with low correlation to other asset classes. As such, it can play an important role in a diversified investment portfolio and can provide a steady and growing stream of income as well as capital growth.

We recognise that nearly all of our private clients have significant residential property exposure mainly through ownership of their own homes and additional residential properties. When we mention property we mean the industrial, office and retail property sectors which have very different characteristics. We are mindful that liquidity is of high importance to our clients and therefore we only invest in well-diversified property funds that meet our requirements.

The UK government has announced the introduction of real estate investment trusts (REITs) in the March 2006 Chancellor’s Budget. These are property savings vehicles which will be exempt from corporation tax on rental income and capital gains tax but they will have to distribute 90 per cent of their profits to investors as income. This should make it even easier for investors to gain exposure to this asset class, as members of the quoted property sector look to convert into these new vehicles. We expect to include REITs in many of our portfolios over time, with the rest of the quoted property sector still remaining a valid alternative.



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