Henderson launches property fund

Henderson Global Investors is launching a Global Property Companies closed-ended fund. Marketing begins this month and the fund’s prospectus will be published mid-June.

A placing and offer for subscription is expected to close by the end of month. The fund will be run by the firm’s property equities team, led by Patrick Sumner.

The fund’s objective is to provide investors with a total return, primarily through investment in listed property and property-related securities. Asset-backed securities, preference shares, convertibles and infrastructure or Private Finance Initiative funds may also be held. Henderson is aiming for an initial quarterly gross dividend yield of at least 4.5%, based on the issue price.

The firm points to solid property market fundamentals as the reason behind the launch. It says the asset class has a low correlation across regions, while providing bond-like income. Henderson also highlights ageing populations in Western countries and the consequent need for income as a driver.

The firm says using equities to gain exposure to property has several benefits: improved liquidity over property, improved risk-to-return ratios and increasing opportunities related to the emergence of real estate investment trusts.

It has constructed a model portfolio in preparation for the fund launch. At April 25, the fund was significantly underweight North America and overweight Continental Europe, compared with the FTSE Epra/Nareit Global index.

There were also smaller allocations to Britain, Australia and Asia. In terms of sector, the portfolio was overweight retail, offices and industrials. The underweight positions were residential, healthcare, storage and hotels.

The fund will use the investment process applied to the firm’s existing property equity funds. This combines top-down macroeconomic and strategic views from global economists with bottom-up property and specialist analysis.

The fund will be Guernsey-domiciled and listed on the London Stock Exchange. It will be run against an absolute return benchmark of 8%, above which investors will pay a performance fee of 15%. The fee is in addition to an annual management fee of 0.75%.

At the time of going to press, Henderson declined to comment further on the launch.