Standard Life Investments has refocused its £420 million Select Property fund to emphasise direct holdings over real estate shares.
To be renamed the Global Real Estate fund, it will introduce a new target range of 50%-80% held in physical property assets.
To reflect this, its benchmark will also switch from the IMA Property sector - which the firm observed ‘is increasingly populated by real estate securities-only funds’ - to the IPD Direct/MSCI World Real Estate Custom index, which includes both direct and listed real estate assets.
The group argued that the move would ‘deliver a more stable mix of assets, lower volatility in the fund’s price movements and the potential for a higher income yield’.
The fund will continue to be managed by Andrew Jackson, head of wholesale and listed real estate at Standard Life Investments, with Svitlana Gubriy as deputy manager.
‘We engaged with clients over a period of time and conducted extensive research across a range of distribution channels into how this fund might adapt to best support the needs of our investors going forward,’ said Jackson (pictured).
‘We believe this positive realignment of the fund will enable us to take ongoing but increased advantage of the tangible benefits of direct real estate investment alongside the enhanced accessibility of real estate securities.’
In a final change, the fund will no longer hedge its foreign currency exposure.
The fund has returned 12.7% over the past three years, leaving it bottom of its Citywire Property - Global Equity sector for the period, for which the peer-group average is 21.5%.