Chapter 8 - Property

Question 1

Core funds

Answer 1

Usually lower risk

Usually open ended

Return is benchmarked against property index

May have liquidity issues in time of market stress

Question 2

Core plus and Value added funds

Answer 2

Aim for higher return

Use gearing/debt

Mor active management style

Question 3

Opportunistic funds

Answer 3

More similar to private equity

Typically closed ended

Exploit opportunities to acquire from distressed sellers, redevelopments and in emerging markets

Higher risk

Question 4

Define Property

Types of funds
Advantages
Disadvantages

Answer 4

Defined by IA as specialist fund category 60% direct property or 80% property securities.

Property unit trusts (core, core plus value, opportunistic)
Paifs 
ETFs
REITs
Limited partnerships (unlisted)
Enterprise zone trusts

Relative low correlation with bonds and equities, portfolio diversification benefits. Attractive absolute returns. Some offering of tax benefits.

Volatile returns. Liquidity issues.