Managed investment Funds which invest in globally listed property related securities. A number of funds will exclude Australian listed real estate while others will include them. Two main bench mark indexes used include the FTSE/EPRA NAREIT Index and the UBS Global Real Estate Investors Index.
Managed Investment Funds that invest in Asian listed Property Securities. Some of these types of funds may still have an exposure towards Australian based listed Real Estate Investment Trusts. The benchmarks employed are usually a combination of locally based property indices. It should be noted that the there is a large percentage of property developers that make up Asian based property securities funds.
Managed Investment Funds which invest in listed Australian based Real Estate Investment Trusts (A-REITs) and other property related securities. The common benchmark that is employed is the S&P ASX A-REIT 300 or 200 index.
Managed investment funds which invest in a combination of direct real estate (usually commercial) listed real Estate investment trusts (REITS) and other unlisted property trusts. While there are no hard and fast rules as to what the minimum/maximum allocation towards direct real estate is, SQM Research will generally define a hybrid property fund where there is a maximum 75% exposure to direct real estate and unlisted property trusts. In other words, the fund must have a minimum 25% liquidity in the form of cash or property related securities. The benchmarks vary depending upon the contrast of exposure.
Managed Investment Funds that invest primarily in direct real estate. The real estate usually is in the form of various commercial property assets such as Office, retail and industrial. However, in recent times, specialist property funds have been investing in such real estate as hotels, health and aged care properties, caravan parks, specific property development projects and residential real estate. Direct property funds may come in the form of open ended property funds where there are multiple properties in the portfolio; through to closed-ended property syndicates where there is just one property in the fund and there is a defined close date for the syndicate. The key to note here is that Direct Property funds are normally illiquid by nature. It is important that investors considering these types of funds are aware of the precise exit mechanisms available to them.
Managed Investment Funds which invest in a range of mortgages.
The money is invested by lending to another party for the purpose of purchasing a property. In most cases the property will already exist but some mortgage trusts will lend to property development projects.
The loan is secured by means of a mortgage over the property. This means that should the borrower be unable to make the agreed payments on the loan, the mortgage trust (as mortgagor) may take possession of the property. The property is then generally sold in order to recover the amount owing to the trust.
To ensure that the value of the property will at least cover the amount of the loan, most mortgage trusts lend no more than an agreed percentage of the value of the property. Between 50 per cent and 75 per cent is the normal range of lending - this is called the ‘loan-to-valuation ratio’ (LVR).
Managed Investment Funds which invest in Infrastructure related listed securities trusts. The nature of the underlying infrastructure tends to vary markedly to include toll roads, electricity sources and grids, pipelines, gaols, airports, desalination plants, etc. There are a large variety of indexes for managers to choose from, which enables the manager to best choose an index which more closely represents their strategy and mandate boundaries. Infrastructure Securities Funds available to Australian Investors predominantly are global in nature. There are very few domestic infrastructure securities funds due to the low numbers of domestically listed infrastructure funds in this country.
Managed Investment Funds which Invest either wholly or partially in direct Infrastructure assets. The nature of the underlying infrastructure tends to vary markedly to include toll roads, electricity sources and grids, pipelines, gaols, airports, desalination plants, etc. Infrastructure Funds available to Australian Investors are predominantly global in nature. Direct Infrastructure investments are generally open to institutional investors only, however there are some funds which retail investors can invest in. As with Direct Property, Direct Infrastructure funds are normally very illiquid by nature. It is important that investors considering these type of funds are aware of the precise exit mechanisms available to them.
A structured product is generally a pre-packaged investment strategy based on derivatives, such as a single security, a basket of securities, options, indices, commodities, debt issuance and/or foreign currencies, and to a lesser extent, swaps. The variety of products described is demonstrative of the fact that there is no single, uniform definition of a structured product. However a primary feature of most structured products is a "guarantee" function, which offers protection of principal if held to maturity, which is normally done at the expense of limiting the upside.