Investors Embrace Property and Smaller Companies Trusts

Property and smaller companies close-ended funds captured investors' attention on Morningstar.co.uk in July following the EU referendum

Karen Kwok 12 August, 2016 | 2:55PM

Property trusts have been hit post Brexit, with the sector trading at a wide discount – but this isn’t stopping savvy investors looking for bargains. Morningstar data reveals that the F&C Commercial Property Trust (FCPT) is among the top 10 viewed closed-end funds in July on Morningstar.co.uk. This trust is currently trading at a 10.4% discount. Despite of its 5% loss in 2016 so far, the trust has gained positive returns in the past seven years. It has 9.3% five years annualised return.

UK commercial property has been a very popular area for investors seeking a reasonable level of income in the past few years due to the “rock bottom” government bond yields, David Holder, Morningstar investment research analyst said.

Investors’ interest in commercial property has cooled since the beginning of the year as the Brexit vote loomed and high returns of the past three years looked unsustainable. These fears were proved correct; Six open-ended property funds suspended trading temporarily due to liquidity issues triggered by Brexit uncertainty last month. Closed-end funds in the UK Property category also saw their values fall, from a premium of 3.5% on May 24 to a discount of 3.7% on July 22.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BlackRock Smaller Companies Ord1,892.00 GBX0.00
BlackRock World Mining Trust plc634.00 GBX1.93
BMO Commercial Property Trust77.80 GBX-1.89
City of London Ord396.00 GBX0.51
European Opportunities Trust735.00 GBX0.14
Finsbury Growth & Income Ord907.00 GBX-0.44
Murray International Ord1,226.00 GBX-0.33
Schroder UK Public Private Trust plc34.80 GBX4.50
Scottish Mortgage Ord1,245.00 GBX1.30
Witan Ord237.00 GBX0.00

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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