Real Estate Hedge Fund

The Main focus of our Guaranteed Property Fund is to provide investors with the benefits of investing into the Property Market without taking the associated negatives of buying property directly themselves. This fund comes with the added benefit of being 100% capital protected should the investor hold the fund for a minimum period of five years.

Property investing has traditionally outperformed many other asset classes and has shown to be a suitable hedge compared to holding all funds in equities as there is only a weak correlation in asset classes. However, when buying into property for investment purposes the investor encounters a number of drawbacks compared to equity investments. This fund seeks to remove many of these negatives.

There are a number of issues a prospective investor needs to consider when acquiring a property. Such drawbacks include time, liquidity, risk and lack of scale and possibly a lack of understanding of how the property markets work.

Buying a property is a lengthy process in terms of identifying then acquiring the correct property, maybe arranging finance, insuring the property and then finding suitable tenants. However investing directly into a fund these issues are taken on by the management team. Your funds are simply pooled together with other investors then we identify the best property to buy into for our clients to provide above average returns.

Buying property reduces liquidity significantly. Your money is tied up into the property until you decide to sell. However, through investing into a fund you have access to your funds at all times. BEO Financial has a commitment of returning funds to investors within a period of 10 working days after the client requests this.

Whenever people invest into any asset class there is always a risk. However, when investing into a specific property there are specific risks attached to that property. The purchased property may have unforeseen problems which makes this a poor investment despite the UK property markets doing well as a whole. Problems could be structural or simple a bad tenant. Yet by pooling into a collective fund, should one property not perform then the other investments will ease this burden.

Quite often the best performing investments into property is larger scale projects. This usually means building a block of apartments or commercial buildings where the real returns are made in the development side, not just organic growth in the property market as a whole. Because of the size of such developments this area is usually outside of the scope for the average investor. Yet by investing into a fund an investor can participate in such an developments and gain exposure to the development side which has more profit potential.

There is a well know investment adage which is “invest in what you know”. This simply means that when you invest into something you understand you are likely to be more successful. Our fund manager and project management team has an outstanding knowledge in the property market, having completed a number of successful developments, which have delivered strong returns.

As explained earlier, investing into a property fund has a number of advantages compared to buying property directly. This section seeks to explain how this fund works in general for investors.

Like most funds investors buy shares into the fund, these share can go up or down in value over time. When the investor decides to sell, they can get whatever price the shares are trading at. Because this fund is Open Ended you can sell your shares at any time as you do not need to find a buyer to sell out of the position. In addition, investors have the option to buy a Capital Protection Policy. This will payout should the fund be in a negative position five years after you buy into the fund. In return the insurer will take 30% of profits you make in the fund. This Capital protection Policy is designed for the more risk adverse investor. Investors seeking higher returns may decide not to enter into this contract.

The fund can invest into any property project providing that it is based in the UK. Typically, most projects sourced are larger developments which offer higher upside potential. This fund also uses leverage. The BEO Financial Property Fund has the capacity borrow up to 70% from bank for finance. As a result the banks will take a first charge the developments until they are fully repaid. in addition, BEO Financial also offers an Asset Backed Property Bond to increase leverage further. As a result, investors into the fund are able to acquire a substantial amount of exposure to the property market relative to their amount of funds invested. This has the effect of generating very strong returns to date.

Like most of our funds we only take a performance fee when we make our investors money. Our performance fee is set at 25% of profit attained from investing into projects after all costs have been deducted. Contact your relationship manager to obtain further information.