According to the Investment Association (1), UK Equity Income (including investment purchases through equity crowdfunding platforms such as Property Moose) has seen the highest investment in the UK for 7 of the 13 months to the end of December 2015. Furthermore, July 2015 saw UK Equity Funds sales hit a 16-year high at £943 million (5). In the same 13-month period, Moneywise reported (3) a mass exodus from fixed income investments of £198million into cash and other investments.
Similar moves have also been spotted in the energy and commodity markets by the World Bank who show a 72% plummet in the average price of oil globally (2).
Is the tide turning away from investments that were traditionally thought to be relatively “safe”, following predictable growth trends, towards those that were traditionally viewed as “riskier” or unpredictable?
In my opinion, rock bottom interest rates are the obvious culprit in the case of fixed Income. Bonds and securities that track the base rate at a small margin will always suffer smaller yields. Underperforming fixed income investments therefore are being ditched in favour of equity, targeted absolute return and property.
In an article on thisismoney.co.uk, Gavin Haynes, MD of Whitchurch Securities, explains his rationale for Equity investments (4); “Many of our holdings have produced double digit returns, with favour for medium and smaller companies, which have a more domestic focus. We have also favoured defensive equity income funds that have sought out safe dividend streams”. The move towards equity from fixed income therefore is not a case of risk but a shift in culture which suggests to us that there is a new upper limit for the risk tolerance of the most conservative investors.
How does this, then, apply to Property Moose investments?
Property Moose (PM) investors become shareholders in the UK Ltd companies that own each individual property; also known as Special Purpose Vehicles (SPV). An investment through PM therefore is an equity investment. This blurs the conclusions that can be drawn from a report in which the Investment Association (1) lists equity and property as two separate investment classes. We believe that PM investors can therefore be corroborated in their confidence by the fact they are now aligned directly with the investment strategies of securities and investment firms. It also seems that the trend is set to continue. Gavin Haynes explains, “We see little reason to change this strategy in 2016 and believe that the equity friendly environment of low interest rates and steady domestic growth will be supportive for medium and smaller companies”(4).
More good news for PM Investors is that their yield should be unaffected by any looming interest rate rise. All Property Moose SPV costs are calculated up front and displayed transparently on each individual property page during the funding phase. The target fund size reflects the property purchase price and all other costs associated with refurbishing, completing and eventually disposing of the property.
Check out the current opportunities today.
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
Property Moose is a trading name of Crowd Fin Limited which is an Appointed Representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (no: 574048).
References
- http://www.theinvestmentassociation.org/investment-industry-information/fund-statistics/statistics-by-sector.html
- http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/2/891891454514292219/CMO-Pink-Sheet-February-2016.pdf
- http://www.moneywise.co.uk/investing/first-time-investor/should-you-invest-fixed-income
- http://www.thisismoney.co.uk/money/investing/article-3363981/What-watch-2016-Brexit-oil-price-rate-hike-bond-threat.html
- http://www.theinvestmentassociation.org/media-centre/press-releases/2015/press-release-statistics0715.html
