MLC Reseach Warns on Unlisted Property
If you are invested in a managed growth style portfolio through your superannuation or investment, your fund will not doubt hold a portion in listed and unlisted property trusts.
The article below from Money Management shows although the sharemarket has recovered over the past couple of months, investors may not receive the level of returns they are accustom to over the past few years:
3 August 2009 | by Mike Taylor - Money Management
MLC Implemented Consulting’s senior asset consultant, David Klug, said research undertaken by his organisation has revealed that most of the gap between the valuation of listed and unlisted assets was attributable to “valuation lag”.
“The strong conclusion from our research is that valuation lag accounts for most of the current valuation gap, and therefore unlisted property will continue to be revalued downwards over the coming months,” he said.
Klug said this process had commenced with unlisted markets in Australia and the US deteriorating by minus 7.1 per cent and minus 7.4 per cent respectively over the six months to May.
He said these realities needed to be taken on board by superannuation fund trustees, boards and investment committees, which might be seduced into shifting their investments to providers that are temporarily shining in performance surveys due to their higher unlisted property allocations.
“A 15 per cent allocation to Australian direct property last year would have turbocharged reported returns by up to 7.5 per cent,” he said. “Unfortunately, these returns are likely to prove not only as expansive but as ephemeral as the smile on the Cheshire cat, and in effect you would be investing now largely at 2007 prices.”
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A characteristic of many of the investment portfolios we have recommended in the past, is that our clients understand where they are invested and we can generally provide them with the current value of their investment as at the previous day.
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This document has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person‟s particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. Life Assets Pty Ltd is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 Australian Financial Services Licence No. 236523
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