Gearing Ratio Policy: Gearing policies which allow gearing above 60% should send alarm bells to investors.
Quality Assets: For commercial funds, look for funds that hold assets with long term leases and tenants with strong balance sheets and long histories in business.
Manager Expertise: When it comes to either residential or commercial property funds, look at the manager's history and expertise. Independent research reports can provide investors some rich information in this regard.
Independent Valuations: Check that the manager's policy is to use independent vauations and also that the frequency of valuation is no longer than 12 months.
Fund Reporting: Make sure the manager will provide you with regular, clear and concise reporting via mail and its web site. You may ask for a sample before investing.
Investment Strategy: Does the fund have a clear investment objective and strategy to achieve the investment objective. Have past investments been made in line with this strategy? (Note: past returns are not an indication of future returns.)
Withdrawal Policy: Whether you are investing in a commercial or residential fund, these generally do not provide for withdrawals during the term of the investment and should be viewed as medium to long term investments.
Poor Asset Performance: Depending on the property selected, there is the risk that the value of the assets of the property market may move in an adverse manner.
Global Economic Downturn: Can cause high levels of volatility in property and other markets, resulting in the possibility of increased risks that the asset prices may fall, over the period of investment.
Risk Management: That the investment manager does not perform its obligations under the risk management arrangements or services discussed above.
Financal Risk: If the investment manager borrows against the property investment, the details would be included within the Information memorandum and application form. In order to break even, the value of the Fund must increase by more than the total fund interest payments and other costs the investor has incurred over the term of their loan.
Fund Taxation Risk: The expected tax implications of investing in the PFM Property Funds may change as a result of changes in taxation laws and the interpretations of those laws.
Personal Taxation Risk: All investors should seek their own independent tax advice in relation to their personal investment objectives and financial circumstances.