A group of Welsh dairy farmers turned investment managers has followed up the successes of previous portfolios by launching its third Swedish residential property fund.
Nigel Evans, partner of Evanridge Properties, said the group wants to make the Sweden 3 AB unregulated collective investment scheme, which buys and manages pre-let residential and commercial buildings in Sweden, available to IFA market.
He said the first two funds saw 95 per cent of investment through word of mouth and 5 per cent through advisers, but now Mr Evans wants to grow the IFA share. He added: “From an IFA perspective this fund ticks the high risk box. However it delivers-a steady inflation-linked income stream for capital growth. All we can say is come and have a look.”
Mr Evans said he and two fellow farmers got into fund management in 2005 when they were looking to diversify their own wealth, but were fed up with the high charges and lack of transparency in the active fund management industry.
He said: ‘We wanted good value for money. We realised the real opportunity was in commercial scale residential investment. We looked at Sweden because the rule of law is strong, it has a budget surplus, strong earnings, low debt and high affordability”.
The first two funds, launched in 2005 and 2007, attracted £l8m of investment, predominantly through Sipps, and have delivered 19 per cent and 16 per cent growth to date. The new fund will target a 12.2 per cent internal rate of return, net of all fees and expenses, over a seven-year term. The closing date is .31 March 2012 and the minimum investment is £50,000. It has no initial fee, an annual management charge of 1 per cent and a 1 per cent acquisition fee. A performance fee is paid when the investment is wound up, but only at 20 per cent over a 10 per cent hurdle.
Mr Evans said the majority of his investors were conservative and saw the fund as low risk, with 80 per cent of investment through Sipps on platforms such as AJ Bell, James Hay and Skandia. He said: ‘We buy the properties with tenants and we run them. There is no speculative development. We operate the properties as a going concern providing houses for tenants and income streams. We keep overheads low so we can keep costs structure low. It is like running a vertical farm.”
Kusal Ariyawansa, certified financial planner for Manchester- based Appleton Gerrard Private Wealth Management, said:
“These types of investments can offer a good return and are relatively simple concepts. I am happy to look into them and give clients a point of contact for them, but I cannot directly advise on them because I am nervous of Ucis”