We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

Features

Twitter board

Follow us
  • My week on Twitter 🎉: 4 New Followers. See yours with https://t.co/mCw3VcMQGw https://t.co/odYllgQghg21 hours ago
  • Friday View: Border to Coast launches UK equity tender - Rentokil Trustee faces fine - Gleeson directors banned - P… https://t.co/wx2SJ0bGfG3 days ago
  • Shareholder engagement: It’s good to talk For responsible investors talk isn’t cheap. Not only does research sugges… https://t.co/imwrezJuKJ3 days ago
  • Friday View: PA's DB scheme signs buy-out deal - PIC invests in Midlands housing association - Newton Video on Emer… https://t.co/GbWDdyENlN10 days ago
  • RT @minerva_ESG: Hey, all #ESG and#corpgov tweeps, lend a hand to @portfolio_inst important opportunity to support investors' understanding…10 days ago
  • We want to know your appetite and understanding for ESG! Please click the link to take our 5 minute survey to tell… https://t.co/SsVgQzEKIc11 days ago
  • RT @AonRetirementUK: Great event, thanks for hosting @portfolio_inst. Inspired location too! https://t.co/we7Ou46ns311 days ago
  • Full house at our Portfolio Prepared event, Oliver Hamilton Illiquids specialist @AonRetirementUK discusses conside… https://t.co/F0qPFPjUSP11 days ago
  • West Midlland Pension Fund’s Jill Davys: “I am reluctant to overpay for assets” Assistant director of investments a… https://t.co/YHtEIU5BSN14 days ago
  • Friday View: DWP plans ÂŁ1m fine for "reckless" sponsors - Veolia appoints actuary - TPR fines Smart Pensions - UK s… https://t.co/9kUsw6mric17 days ago
  • RT @NewtonIM: Take 5 minutes to complete the @portfolio_inst ESG survey, which is part of its 'Raising Standards in ESG' initiative, and sh…17 days ago
  • This months cover story: Carillion: Lessons for trustees ''The collapse of the construction giant raises questions… https://t.co/L48HDqT0lB18 days ago
  • RT @PensionsSion: Portfolio Prepared? Join us and @portfolio_inst on 4th July 2018 to hear presentations from leading professional #trustee…18 days ago
  • Breaking: DWP proposes ÂŁ1m fine for "reckless" DB sponsors https://t.co/7rsDaGgS5v #DWP #DBWhitepaper #TPR https://t.co/YQqy9Qr7tN20 days ago
  • Our latest Roundtable: Factor Investing ''Pursuing value, momentum, quality or low volatility strategies in bond an… https://t.co/qugefevAN420 days ago
  • My week on Twitter 🎉: 2 Mentions, 3.3K Mention Reach, 5 Likes, 6 Retweets, 7.76K Retweet Reach. See yours with… https://t.co/IZfviidt4H21 days ago
  • Friday View: Trustees feel the heat over climate change - bankers' pensions back in black - TPR suspends trustee -… https://t.co/kUKa8QUF9w24 days ago
  • Increased regulatory oversight will be risk-based, TPR keyperson will meet schemes deemed riskier several times a y… https://t.co/wUiKPGESaU26 days ago
  • Lesley Titcomb, TPR chief executive says change is on its way, the regulator will increase oversight between valuat… https://t.co/Wu8Pv6TfqS26 days ago
  • Join us and @AonRetirementUK on the 4th of July at the luxurious Victorian Bath House featuring educational presen… https://t.co/r1abr8Qls027 days ago

Alternatives

Property: Solid returns

Property: Solid returns

Mark Dunne
Tuesday 15th May 2018

Low gilt yields are forcing schemes to pile into bricks and mortar. Mark Dunne asks if the reward is worth the risk.

It has long been said that an Englishman’s home is his castle; but these days it could be his pension too. The office where he works, the shop where he buys his groceries or the warehouse that sends him the latest bestseller to read on his early morning commute could also be funding his retirement.

With the yield on 10-year UK government debt hovering around 1% in recent years, several retirement funds have turned to bricks and mortar to help pay their members’ benefits. Yields range from 3.25% on offices in London’s West End to 5.25% on retail warehousing at the side of motor ways, according to estate agent Savills. So it is easy to understand why institutions have been lured to these assets in a low return environment.

Another reason is risk. Pension schemes have been forced to stomach more risk to generate much needed cash, but the longer-term returns offered by real estate are, on average, considered to be within reasonable risk parameters compared to equities.

One fund that has built a sizable allocation to property is RPMI Railpen. It has ÂŁ2bn tied up in bricks and mortar, or 12% of the ÂŁ28bn of assets it manages for the Railways Pension Scheme.

“We certainly believe in property,” RPMI Railpen head of property Anna Rule says. “We are looking for new, interesting opportunities that are going to meet our target return.” She does, however, admit that this approach has been built partly out of necessity. “The strategy also reflects the need to look at alternative asset classes in light of lower bond rates.”

Page: 1 2 3 4 5 6
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!

Friday View

Friday View

Shareholder engagement: