Real Estate Fund eyes London, Paris and Stockholm opportunities

From launch on 8th April 2010 to the close of its first financial year on 31st March 2011, the Thames River Real Estate Securities Fund, which now has net assets of approximately £47 million, has returned 20.80%, compared to 15.48% for its benchmark.

The Fund has outperformed its benchmark in each quarterly period since inception.

The Fund, managed by James Wilkinson and Marcus Phayre-Mudge, is a specialist, pan-European, UCITS III enhanced long fund.   The managers are able to invest long and short in stocks and indices to enhance returns relative to their benchmark index. Gross exposure is limited to between 80% and 160% of net assets and net exposure to between 60% and 140%.

James Wilkinson commented: "We are pleased with the performance and growth of the Fund over its first year. In spite of heightened volatility and a series of macro shocks including Eurozone sovereign debt issues and political instability in the Middle East, we have been able to add over 5% to the positive returns from our markets. Furthermore, we are now more optimistic about the outlook for European property than we have been at any time in the last four years. The shape of real estate returns - a high and stable income return with more cyclical capital returns - is very attractive over the long term and can provide attractive diversification benefits within a multi-asset portfolio."

"Inflation and interest rate expectations across Europe continue to rise but real estate continues to look well placed. In the UK, sterling futures contracts imply that 3 month LIBOR will increase from 0.8% today to around 2% by March 2012 and to just under 3% by March 2013. The five year swap (which factors in this interest rate trajectory) is priced at around 3%, implying that a well capitalised UK property company ought to be able to finance acquisitions at a total debt cost of around 5% including margin. Our judgement is that property, offering average yields of 6% to 6.5% across the UK and Europe with the likelihood of further income growth to come, remains attractively priced. We are particularly positive on prime property in Central London, Paris and Stockholm but are more negative on Benelux, Southern Europe and the UK regions."

The managers are true stock pickers who combine this proven capability with the skill and experience utilised in the management of the other funds in the range. They also seek to identify strong value drivers and aim to provide market beating returns and a degree of downside protection within the framework of a regulated structure offering daily liquidity and a high level of transparency.

The Fund is focused on developed Europe and has see-through exposure of 36% in the UK, 20% in France, 16% in the Nordics, 6.5% in Switzerland and 6.4% in Germany. The Fund invests across large, mid and small cap companies.