F&C is launching its first open-ended real estate fund as it faces losing the mandate for its £617m F&C Commercial Property trust (FCPT).
Co-managed by Julian Smith and Guy Glover of F&C REIT, the UK Property fund will invest in UK commercial property at what the managers believe is an attractive point in the market cycle.
The pair will build up a portfolio of new assets specifically chosen for the fund, aiming to provide a total return based on income and capital appreciation.
Risk will be managed through diversification at sector, geographic, property and tenant levels. Additionally, the fund will retain a cash weighting of 10% to 20% to manage liquidity.
Smith says: "Market forecasters are currently predicting upgrades for 2010, while the sharp falls from 2008 and 2009 suggest that downside risk is considerably reduced.
"As the economy slowly recovers, we anticipate the demand for property will increase and, given low cash returns, we believe the opportunity cost and yield for commercial property is very attractive."
The fund is structured as a Non-Ucits Retail Scheme (Nurs), with a minimum investment of £1,000. The initial charge is 5% and it carries an AMC of 1.5%. Commission is available at 3% with 0.5% trail.
F&C run three property investment trusts, the largest of which is the FCPT, the board of which has agreed a takeover by the Ignis-run £728m UK Commercial Property trust.
The merger is still subject to shareholder approval and F&C is proposing an alternative plan which would see management of FCPT stay with its property managers.
F&C REIT was formed through the merger of REIT Asset Management and F&C Property Asset Management in 2008. It manages assets of £7.5bn.
