The Investment Association announces outcome of Property sector consultation

Wednesday 13 June 2018

The Investment Association (IA) has today announced the outcome of the Property sector review, resulting in the creation of a UK Direct Property sector and Property Other sector.

Following a consultation with IA members and the Association of Real Estate Funds (AREF), the IA’s Sectors Committee has decided to split the Property sector, with two new sectors to be introduced on 1 September 2018.

Commenting on the outcome of the review, Galina Dimitrova, Director of Investment and Capital Markets at the IA said:

“The creation of a UK Direct Property sector will make it easier for savers and their advisers to find information on funds investing in bricks and mortar assets based in the UK and make like for like comparisons on this asset type.”

The UK Direct Property sector will include funds that invest directly in UK property, including commercial and residential property, as well as student accommodation, leisure and healthcare assets.

The Property Other sector will accommodate property funds that do not meet the requirements of UK Direct Property sector, such as those which invest in property securities, direct funds with a specialist mandate and hybrid funds. This sector will continue to offer a breadth of property fund types, although the number of funds will be reduced, making it easier for investors to conduct due diligence on this smaller pool of funds.

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Notes to Editors:

The IA’s Sectors Committee has oversight over the Investment Association’s sector scheme and as part of its remit it advises on the creation of new sectors or the review of existing sectors.

New sector definitions:

UK Direct Property Funds

Funds which invest an average of at least 70% of their assets directly in UK property over 5 year rolling periods. Funds will be monitored and those that invest less than 70% of their assets in direct property for any continuous 12 month period or fall below 60% for any month may be removed from the sector.

Property Other sector

Funds which predominantly invest in property and do not meet the requirements of the UK Direct Property sector. In order to invest "predominantly" in property that is not UK direct property, funds:

• Invest an average of at least 70% of their assets directly in property over 5 year rolling periods but do not meet the requirements of the UK Direct Property sector; or
• Invest at least 80% of their assets in property securities; or
• Invest at least 80% in a mixture of direct property and property securities

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About the Investment Association:

• The IA champions UK asset management, supporting British savers, investors and businesses. Our 240 members manage £6.9 trillion of assets and employ 93,500 people across the UK.
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