Mr Bennett joined Maja to talk about the importance of a well-diversified portfolio and the benefits of including commercial property.
“Property brings something to a lot of portfolios that’s really beneficial,” said Mr Bennett.
“It’s less volatile.
“Unlisted property doesn’t move other than independent valuations, as well as other out-of-cycle rental growth and so on. So, from that point of view, it does provide that lower volatility and it’s not highly correlated to those other asset classes like your Aussie equities, global equities,” Mr Bennett added.
Also on this podcast, Mr Bennett delves into building a property investment portfolio from start to finish and explains why he still believes the office will remain the dominant place to work.
Unlisted property trust may be fine within a well well diversified portfolio granted, however the average punter needs to be very mindful of some key aspects of the unlisted property trust space, illiquidity, weighted average lease expiry durations, the portfolio managers admin fees, LVR’s, debt management and the terms of the debt facilities, the fees payable to the managers upon the transactions of acquisition and subsequent sale, often close to 2% or greater. Just a couple of things?? Aside from this what about the actual related party transactions in open end trusts, these can often lead a manager to move under performing assets into a larger diversified portfolio this may result in the fundamental downfall of the unlisted trust, as happened all to often around the time of the GFC. For mine clients need to be very cautious about the appeal of the yield story alone as this may be the lure that has one interested, but be wary of who is holding the rod. Thankfully the contributor here was not one of those managers, but careful and calculated research is always a considered approach.