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Commercial property still appeals for its yield and diversification characteristics but debate rages over the best vehicles for accessing the sector

Fund trends Property

Investors in UK direct property would have realised higher total returns by choosing investment trusts over open-ended funds in recent years, but the nature of closed-ended funds means they have endured the biggest losses in times of extreme crisis.

Property has gone through a roller-coaster ride in the past decade, with the sector in the eye of the storm during the financial crisis, before slowly regaining investors’ confidence, then witnessing a fresh rush of cash.

Of course, sentiment took another hit in 2016 when the UK voted to quit the European Union and money flowed out of property funds, prompting a number of open-ended vehicles to first revalue their holdings then suspend trading.

When investing in direct UK property, investors have two broad choices: open-ended Oeics and unit trusts or closed-ended investment trusts.

Gary Jackson Editor, FE Trustnet

Both options have their relative advantages and disadvantages.

When it comes to property some investors prefer a closed-ended structure because of the inherently illiquid nature of the underlying investments, whereas others like the scalability and relative simplicity of the open-ended structure.

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