The Investment Association (IA), the trade body that represents UK investment managers, is to re-vamp the way it classifies property funds, a move that could make it easier for investors to compare funds that invest in physical property.
From 1 September the IA will categorise property funds in one of two new sectors: UK Direct Property and Property Other. UK Direct Property will include funds that buy physical UK property, including commercial and residential buildings, student accommodation, and leisure and healthcare buildings. Funds in this sector must have an average of at least 70 per cent of their assets invested in physical UK property over five-year rolling periods.
The Property Other sector will include funds that invest in the shares or debt of property companies, property funds with a specialist mandate and funds that invest in more than one type of property asset. Funds in this sector must have an average of at least 70 per cent of their assets in property over rolling five-year periods, that is predominantly not UK direct property, or at least 80 per cent in property securities or 80 per cent in a mixture of direct property and property securities.