Press Release

Moneyspider.com

PRESS RELEASE

FOR IMMEDIATE DISTRIBUTION 
 

12 November 2007 

Commercial property fund foundations crumble as latest Moneyspider.com research shows further falls in values 

FALTERING commercial property funds continue to give investors concern as new data from fund analyst Moneyspider.com shows the sector is now lagging way behind peers in the UK All Companies sector. 

Norwich Union's juggernaut fund is now hitting investors hard, as the once hugely popular investment has lost over five per cent in the past 12 months. 

Conversely, investors in NU's UK Growth fund have enjoyed gains of over 12 per cent in the same period. 

While the travails of the sector have been under the spotlight recently, the hundreds of thousands of investors in the NU commercial property fund may well be looking for an exit.  

The data comes hard on the heels of the Bank of England's recent financial stability report* highlighting the vulnerability of investors exposed to an uncertain market. 

Until the end of 2006, commercial property funds were enjoying annual increases of around 18 per cent - but the Moneyspider.com analysis will give investors serious pause for thought. 

"The Bank of England's financial stability report also makes clear it is concerned about the illiquidity** of this market on which so many investors have risked their shirts," said Moneyspider.com's Tony Ahearne. 

Several independent commentators have reported that the outlook for property is worsening. Life giant Norwich Union - the largest direct investor in the sector - recently disclosed a fall in the value of its property holdings. This is the first industry-wide decline in commercial property values since 1992, the time of the UK`s last property crash.*** 

"There is around £16 billion currently invested in this sector (Investment Management Association, October 2007), and a lot of people are going to find it harder to jump ship, as many of the major retail funds like Norwich Union have pushed up the cost of withdrawals - getting out can now be an expensive option," he added. 

"While our data shows that the sector is clearly ailing, investors always need to bear in mind that commercial property is not a short-term asset. That said, if you are in any of the funds we have highlighted (see table below) then you are probably losing money."

The commercial property market has historically suffered dramatic swings from boom to bust, and Moneyspider.com's findings underpin (see table) how important it is for investors to monitor their funds on a regular basis and to compare not only different fund performance but crucially sector performance.

"It really does pay to keep a close eye on the performance and ratings of funds in different sectors and to compare and contrast these with the fortunes of property funds," said Ahearne. 

"Investors can track the daily progression of their funds, but our data shows that they will at the present time almost certainly be better off in another more positive sector but clearly they need to weigh carefully the costs of coming out of property funds which can be high." 

Moneyspider.com offers a comprehensive yet easy-to-understand fund monitoring service with personalised reports including valuations and ratings on each fund updated on a daily basis. Further details on the mechanics of Moneyspider.com can be found at www.moneyspider.com.

- Ends - 

* BoE Financial Stability Report October 26 2007  (".in the short run the financial system in the advanced economies remains vulnerable to further adjustments in the equity or commercial property markets...") 

Ibid  

** There have been signs of recovery in recent weeks but some markets are still illiquid and the financial system remains vulnerable to further shocks.  Some important lessons need to be learned by both financial institutions and authorities on liquidity risk management, valuation of complex instruments, disclosures of risk positions and on crisis management." 

*** Financial Times, "Commercial property yields are close to record lows", November 03 2007 

Editor's notes

Moneyspider was launched in April 2004 and is a totally independent investment research and information company for private investors. Moneyspider constantly monitors all 2,000 or so funds available to UK investors and provides online personal reports that are updated on a daily basis showing current valuation and performance of all funds in one place.

The Moneyspider Rating® provides a unique assessment of the performance of each fund measured against four key parameters:

• Sector ranking: a comparison with all other funds in the same sector as your fund (based on the sector definitions used by the Investment Management Association).
  
• All funds ranking: a comparison with all other 2000 or so Unit Trusts and Open Ended Investment Company funds available to UK investors.
  
• FTSE 100: a comparison of the total return of the fund with the total return of the FTSE 100 index (comprising the UK's 100 largest companies), providing a consistent benchmark for each fund.
  
• Cash: a comparison of the fund's performance with the return from an equivalent amount deposited in a 90 day non-high interest access account.

Moneyspider is an appointed representative of Anthony, Bryant & Company (Investment Consultants) Limited of 25 Eccleston Square, London SW1V 1NS, which is authorised and regulated by the Financial Services Authority. The contents of this press release are not intended, and should not be construed as, advice, a recommendation or as an inducement to buy or sell any investment. Moneyspider relies on information regarding investments that is provided by third parties and accepts no liability (including that arising from negligence) for the accuracy of such information.