News & Media

You’re a nerd to follow the herd:
FASHION FADS COST INVESTORS BILLIONS

moneyspider.com warns against getting caught up in the property hype as
investors rush to beat the ISA deadline

Following fashion, investing in hot and over-hyped market fads such as the Technology Funds boom and bust has cost investors billions. In the wake of more than 10 property funds being launched in the last 12 months alone, Bill Ross, Managing Director of online funds ratings provider moneyspider.com warns investors rushing to beat the imminent ISA deadline to beware following the herd.

You’re a nerd to follow the herd

“The writing is on the wall,” says Ross. “We have seen a glut of new property funds come to the market over the last year, and there is a real risk that many investors will be caught up in the marketing hype surrounding what could well come to prove the next costly investment fashion fad.

“While there are some quality property funds available through groups like New Star and Norwich Union, of the 21 property funds on offer to UK retail investors, only 11 have been around for longer than one year*. Of those 11 funds, just four have been awarded a Moneyspider A or B rating.”

Property expert Richard Burrell, widely respected manager of the £130m Westbury Property Fund says the flood of groups launching direct property funds over the past 12 months has led to a lack of supply of the asset class, with several managers maintaining large cash weightings.

"The real worry is a lack of supply of good deals as there are so many funds after these properties. There is simply a huge amount of money chasing these assets.”

Don’t get your fingers burnt

“With 10 new funds launched in the last 12 months alone, you have to ask yourself whether these launches were based on a real belief that property is going to out-perform or were simply driven by the fund managers’ marketing machines and whether they have the investors’ best interest at heart?” added Ross.

“Far too many investors got their fingers badly burnt in the Technology and other ‘here today, gone tomorrow’ fads. As an organisation that draws investors’ attention to the performance of their funds, we wouldn’t want to see a repeat of this in the Property sector.

“Those enticed into investing in the Henderson Global Technology Fund, one of the most aggressively promoted funds five years ago, would have seen an investment of £5,000 shrink to just £2,700 today - a loss of almost 50%.”

moneyspider.com is not alone in its concern over property funds.
In February, Moneywise magazine wrote: “Uneven prospects are in store for this type of individual savings account. Anyone planning to invest this year’s individual savings account allowance in commercial property should beware the hype.”

In today’s FT reporting on the annual MIPIM property conference in Cannes, John Stephen, UK Chairman of Jones Lang LaSalle said: “Everyone is awash with cash. But the question everyone is asking is, when will it end? There are an awful lot of people who have never seen a downturn.”

Top 3 Property Funds as rated by moneyspider.com

Bottom 3 Property Funds as rated by moneyspider.com

* provisional rating for funds less than 5 years old.

Source: moneyspider.com/Financial Express, as at 10 March 2006.

If you would like to discuss moneyspider.com in more detail, contact:

Gordon Puckey
Phoenix Financial PR
Tel: 0207 947 2856
gordon@phoenixfinancialpr.co.uk

NOTES TO EDITORS

 moneyspider.com provides investment research and funds information to private investors, helping them to make independent and informed decisions. moneyspider.com operates independently of any fund management group.

The moneyspider.com service was launched in April 2004 and is only available online.

moneyspider.com neither advises on nor sells investments . moneyspider.com does assist with switches or purchases on an execution only basis, and rebates 50% of any initial commissions to the investor, the other 50% retained to cover administrative costs.

The service is provided to the investor at no additional charge, being funded by the annual renewal commission usually paid by fund managers to financial advisers.

moneyspider.com targets any investor with an ISA, PEP, OEIC or Unit Trust who isn’t receiving impartial information on the performance of their funds, who isn’t getting a good ongoing service from their IFA or who doesn’t have an IFA.

 Moneyspider Limited is an appointed representative of Anthony, Bryant and Company (Investment Consultants) Limited, which is authorised and regulated by the Financial Services Authority.

How does it work?

The Moneyspider Rating ® is produced by converting a sophisticated proprietary algorithm of 34 computations into a % score, calculated to four decimal points, which is then ranked into one of 5 easy-to-understand ratings - from A (highly rated) to E (very poorly rated). The Rating is calculated against a daily information feed, provided by financial services data collector and solutions provider, Financial Express.

The Moneyspider Rating® provides a unique assessment of the performance of each fund measured against four parameters, each analysed over one, three and five years (weighted towards the longer term) as follows:

Sector ranking: comparison with all other funds in the same sector (based on the sector definitions used by the Investment Management Association).

All Funds ranking: comparison with all other 2,000 or so Unit Trusts and OEIC funds available to UK investors.

FTSE 100: comparison of the total return of the fund with the total return of the FTSE 100 index, providing a consistent benchmark for each fund.

Cash: comparison of the fund's performance with the return from an equivalent amount deposited in a 90 day access account.

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