Merrill Lynch Investment Managers is to launch a UK real estate fund of funds for institutional investors.
“Our recent analysis of the risk, return and diversification benefits of property has suggested that pension funds and other long-term investors in this sector should increase property allocations to 10%-15%,” said Ian Mason, head of MLIM’s real estate team.
The new fund will be for institutions seeking “diversified exposure to UK commercial property”, says MLIM.
“As an asset class the UK commercial property sector is characterised by good income yields. When compared to investing solely in equities, property can provide significant diversification benefits.”
It said that real estate, when combined with an equity and bond portfolio, could cut the overall volatility of investment returns.
MLIM said the product is the result of feedback from clients saying they wanted greater fund diversification.