Reasons Why – Skandia Property Solutions


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Reasons Why – Skandia Property Solutions

  1. 1. Reasons Why – Skandia Property Solutions To help in the preparation of marketing material and reasons why letters, we have prepared the following suggested factual statements to help you communicate the benefits of investing with Skandia Investment Management Limited and the Skandia Property solutions to your clients. It is the responsibility of the individual professional adviser to ensure that any ‘Reasons Why’ letter prepared for investors fully complies with all regulatory requirements. An increasingly popular asset class The attraction of a potentially high and stable income, along with strong capital growth potential, has made commercial property increasingly popular among UK investors in recent years. The appeal of the asset class has been enhanced further with the recognition that adding property within a traditional equity and bond portfolio can offer attractive potential diversification benefits. Commercial property performs in a very different way to other forms of investment as it is driven by different fundamentals. For example, a significant portion of the total return is in the form of rental income which tends to have a measure of quality and relative stability owing to the long-term nature of commercial leases, and therefore less likely to be influenced by other market factors. The Skandia Property Fund The Skandia Property Fund aims to provide capital growth and income in Sterling from investment in a diversified property portfolio, primarily in land and buildings, but it may include property related securities and collective investment schemes, property derivatives, cash or near cash and Government and other public securities. The Fund provides a portfolio of commercial properties which is well diversified both geographically within the UK and across different property market sectors. The portfolio contains properties including industrial, retail warehousing, high street retail and offices both in Central London and the regions. The Fund is managed by ING Real Estate Investment Management (UK Funds) Limited, part of ING Real Estate, the world’s largest property asset manager, which has over $80 billion in property assets under management worldwide (as at October 2006). On a global basis, ING Real Estate manages more than 50 pooled property funds, has 45 offices in 15 countries and employs approximately 1,500 people globally. ING Real Estate Investment Management (UK Funds) Limited has operated pooled property funds since 1983 and won its first segregated mandate in 1987. The company’s pedigree is further assured by its industry recognition for innovation and quality – winning the respected Professional Pensions property manager of the year award in 2000, 2001, 2002 and 2004. By diversifying across the various property sectors and sub-sectors, whilst also maintaining a broad geographic spread across the UK, the manager seeks to create a well balanced portfolio of commercial properties which seek to optimise investment returns at a prudent level of risk. With over £476 million in the fund as 31 December 2006, the Skandia Property Fund offers a complete portfolio of well diversified properties with tenants paying an established income stream and is currently paying an estimated income yield of 4.3% (as at 30 November 2006). *Source: ING/Pensions and Investments Magazine as at October 2006
  2. 2. The Skandia Global Property Securities (LaSalle) Fund The Skandia Global Property Securities (LaSalle) Fund aims to achieve long-term capital growth and income in Sterling through investment in a globally diversified portfolio of property related securities. Global property securities funds differ from UK property funds in two ways. First, and most obviously, they invest on an international scale. As with equity or bond markets, the largest market for property securities is within the US, but there is a good spread of investment opportunities elsewhere across the globe. The second difference is that access to properties is gained by buying shares in companies that own the buildings, rather than investing in the actual properties themselves. This means that the asset class is likely to perform very differently from directly held properties. Investment in global property securities offers an exciting investment opportunity, and the popularity of this investment route has been boosted by its strong performance record. This area of investment has seen rapid growth - the overall size of the global property securities market has almost doubled in the past two years alone and the prospects for further growth are significant. So far, only 4-8% of the quality commercial property market across the world is ‘securitised’ (ie held in the form of shares). The Fund also offers diversification benefits as global property securities behave very differently from traditional equities and bonds. Holding them in combination means that investors can spread their investments across different asset classes and therefore reduce risk. Global property securities are driven by local economies, and therefore performance varies from one country to the next. So, in the same way that a portfolio of equities and bonds can be diversified across international markets, the global focus of the Skandia Global Property Securities (LaSalle) Fund provides this additional level of diversification for investors. The Skandia Global Property Securities (LaSalle) Fund is managed by LaSalle Investment Management (Securities) - one of the world’s leading real estate securities investment managers for pension funds, institutional and retail investors around the globe. With more than 21 years’ investment experience, the firm currently has $6.5 billion of assets under management* in listed real estate securities. *As at 30 June 2006 LaSalle is one of the world’s leading real estate investment managers with approximately $36 billion of public and private real estate assets under management across Europe, North America and Asia Pacific. The firm employs over 500 professionals, including a 22 strong industry-leading strategy and research team. The majority of the Fund’s property securities are held in Real Estate Investment Trusts (REITs). Originally launched in the US in the 1960s to offer private investors access to property investments, REITs have now been adopted by many other countries and became available in the UK in January 2007. They offer investors a highly efficient way of accessing commercial property whilst providing the operator with a tax-efficient, scaleable platform.
  3. 3. About Skandia Investment Management Limited A key principle on which Skandia Investment Management Limited was founded is that no single fund management group can be the best in all areas at all times. Its approach is to choose world-class investment managers to manage a range of carefully constructed funds. Managers are selected for their expertise in particular areas and then monitored closely and replaced where necessary. This approach has proved very popular with investors and advisers, and has helped position Skandia Investment Management as one of the UK’s fastest growing asset management businesses with over £4.3 billion under management (as at 30 September 2006). How to invest You can access both of the Skandia Property solutions through Skandia’s full product range. Additionally you can invest directly with Skandia Investment Management through an ISA, PEP/ISA transfer or direct into the funds. Recommended general wording • Past performance is not necessarily a guide to the future. • The value of investments and the income from them can fall as well as rise due to changes in the value of commercial property. • Annual management charges are taken out of the capital rather than the income of both Funds. For the Skandia Global Property Securities (LaSalle) Fund, other annual expenses are also taken out of capital. This will restrict the capital value of your investment. • Income levels are not guaranteed and may fluctuate. • Investments in land and buildings are relatively illiquid compared with investments in shares and fixed interest securities and may take longer to sell. There is no certainty that the actual price realised on a sale of an investment in land or a building will reflect the most recent valuation and it could be substantially lower. Investors may not be able to realise their investment immediately because the Fund’s assets may not be readily saleable and, under certain circumstances, the Manager has the ability to defer redemptions. • The Skandia Property Fund has a bid and offer price which may vary depending on the flow of investors into and out of the Fund in order to reflect the costs of buying and selling property. The cost of buying property includes stamp duty and legal and valuation fees. The cost of selling property includes legal and marketing costs. • The level of income from the Skandia Property Fund can be affected if it holds vacant properties or if tenants default on rental payments. • The Skandia Property Life and Pension Funds, available through Skandia Life, invest predominantly into the unit trust, but also hold some other assets so have a slightly different asset allocation. • Please note that while the Skandia Global Property Securities (LaSalle) Fund will be affected over the longer term by property fundamentals, it holds investments indirectly, via property securities. This means that the price of the fund will be affected both by events in property markets but also, significantly, by other factors that affect share prices – such as investor sentiment and supply and demand. The price is, therefore, likely to be more volatile than a directly invested property portfolio and may perform markedly differently over the short to medium term. • Although the Skandia Global Property Securities (LaSalle) Fund seeks to reduce currency risk for a Sterling investor by hedging the predominant portion of the non-Sterling portfolio back to Sterling, there will be a residual currency risk arising from any assets not hedged.
  4. 4. • The Skandia Global Property Securities (LaSalle) Fund invests in a small market sector and, as a result, is likely to be more volatile than a more diversified fund and the underlying investments may not be as readily realisable. For more information on this Fund or any other Skandia Investment Management product please contact your regional Skandia consultant. This document is designed for use by professional advisers only and should not be relied upon by existing or prospective clients of Skandia. Skandia Investment Management Ltd, a member of the Skandia Group of companies, is authorised and regulated by the Financial Services Authority. FSA Register number 208543. Registered Office: Skandia House, Portland Terrace, Southampton, SO14 7EJ, United Kingdom. Registered Number: 4227837 England. Skandia Investment Management Limited is the Authorised Corporate Director of Skandia Specialist Funds, Skandia Aggressive Fund, Skandia Balanced Funds, Skandia Cautious Fund and Skandia Investment Funds (investment companies with variable capital).