Merrill Lynch Investment Managers (MLIM) today announced that it is to launch the Merrill Lynch UK Property Fund of Funds, for institutional investors seeking diversified exposure to UK commercial property.
The MLIM real estate team runs the £984m Merrill Lynch Property Fund (MLPF), which was established in the UK in 1982 and is now a Jersey-based pooled investment vehicle.
Ian Mason, head of MLIM’s real estate team, claimed: “Our recent analysis of the risk, return and diversification benefits of property has suggested that pension funds and other long-term investors in this sector should increase property allocations to 10-15%.
“One route for achieving this would be investing in a single property fund, however, particularly with the trend to increase property weightings, feedback from some clients has been that they want greater fund diversification.”
MLIM said that, as an asset class, UK commercial property is characterised by good income yields.
According to MLIM, property can provide significant diversification benefits when compared to investing solely in equities.
MLIM also claims that, when property is combined with an equity and bond portfolio, the volatility of overall investment returns is reduced, without sacrificing expected returns.
References: EGi News 26/04/04
