View the article online at http://citywire.co.uk/money/article/a527074
Diary of a Dumb Investor: I’ve piled into property
I spent my last £1,000 of cash on Friday, ploughing it into a UK property investment trust as world markets trembled.
My friends, I’ve reached a historic point in my investment career: I spent my last £1,000 of cash on Friday, ploughing it into a UK property investment trust as world markets trembled.
Yes, investing right now is a scary business – especially since Frau Merkel spurned my plea last week for Germany to sort out Greece and the eurozone once and for all.
Andy Rumble, a Citywire reader, warned that there was ‘no safe place’ and that my share portfolio would be ‘toast’ for a long time. ‘Throw is the towel and let markets find the true value of assets and stop propping them up,’ he told me. ‘The longer we wait, the more it will hurt.’
Depressing stuff! Yet Wayne Roberts, another reader, gave me some succour, saying ‘blood is on the streets now’ and markets are ‘desperate’ to go up. ‘As soon as Greece is dealt with you're going to regret that you didn't buy now... and Greece will be dealt with very soon as I think the whole world is sick of hearing about it,’ he noted.
I did wait a number of days for some sign of action on Europe; but on Thursday, when the FTSE gave up an eye-watering 4.7% of its value, I decided that there was no point in hoping for immediate salvation from the Germans.
A line from Strictly Ballroom, one of my favourite films, came to me as I hesitated on Thursday evening over whether I was really ready to become fully invested. ‘A life lived in fear is a life half-lived,’ says Fran, the ugly duckling dancer.
And you know what? I refuse to live in fear. I chose to make the London stock market my ballroom – and dance my way to riches, all dolled up in a contract note for TR Property, the investment trust in which I bought shares on Friday morning.
I’ve had my eye on the trust for a while now, ever since I drew up a portfolio plan that had a slot in it for commercial real estate – for the sake of diversity. About 90% of its assets are invested in listed property companies – like Land Securities (LAND.L) – and 9% is in directly owned UK real estate, a large amount of which is in London.
On the face of it, this was neither a great performer nor a particularly cheap pick. The trust’s net asset value has gone nowhere in the past three years, although its total return to shareholders was 10% over the period. And the trust’s shares were trading at a discount of 5% to its net asset value (NAV), annoyingly narrower than their average discount of 10.2%.
But surely the thinner discount is a vote of confidence in the trust. Would I really be better off to pile into some dog that has been absolutely battered in recent months? The point is that I need some property in my portfolio, believe in what TR Property does and refuse to be thrown off my plan by jittery markets. And I will not live my life in fear, dammit!
So I forked out £1,020 for shares in the trust at 157.10p – lower than their June high of 203p and far below their 2007 peak of 262p – coughing up £11.95 in commission to Hargreaves Lansdown, my online broker, and £5.10 for stamp duty.
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The Citywire guide to investment trusts
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Andrew Friend, acting co-manager*, and Marcus Langlands Pearse, co-manager of the Henderson UK Property Unit Trust (HUKPUT), provide an overview of the key risks and opportunities for the UK commercial property market.
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