Smith & Williamson’s James Burns on the diverse opportunity in property investment companies

Octo Members
17 December 2019

A 13-minute watch. 

The most recent guest in our Octo Selectors Series, James Burns, partner and head of multi-asset at Smith & Williamson, talks Gary Shepherd through his preference for closed-ended funds, style drift, and why a “substantial and quick growth in assets” is where invariably managers can make mistakes. 

With property funds again making the headlines, following the recent suspension of M&G’s Property Portfolio, James talks through the benefits of using investment companies over open-ended options, and how the sector has expanded over the years.

“Whereas back in 2005/06 there were a handful of generalist property companies to look at, which were perfectly good for that time, what we’ve seen since the financial crisis is much more sector specific launches be it warehouses, nursing homes, or student property,” he says.

“Asset selectors can take a particular view on that asset class within property and invest accordingly, which is a much more preferable route.”

James also touches upon incidences of style drift among certain trusts, particularly a concern within alternatives.

He gives a potential example: “A company might have been launched to invest in UK renewables projects, and have had great success; but as the vehicle has got bigger and bigger and they’ve raised money along the road, they branched out into, say, Spanish solar panels or wind projects in Italy.

“The returns may be good, but you’ve got to be conscious that was not what the vehicle was originally set up to do. Are these genuinely good investment decisions, or is manager greed kicking in?”

You can read more on James in our Selectors Series interview here, where he discusses more of the characteristics he is looking for in active managers. 


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