Fundwatch: SWIP UK Real Estate Fund

Chris Bamberry says he has experienced the full range of emotions since taking the reins at the Scottish Widows Investment Partnership UK Real Estate fund in October 2007.

"It's been an exceptionally volatile period, which has made for good days and bad, but it has certainly never been dull," he says. "At one stage, it wasn't uncommon for the whole sector to move 3% or 5% either way in a day."

The £10.1 million fund, which was launched in May 2006, aims to provide a total return by investing predominantly in listed companies and other vehicles whose activities include the ownership, management and/or development of UK real estate.

The commercial property market can be divided into three main areas: offices, retail and industrial/distribution. There are also areas such as student accommodation, but Bamberry doesn't have exposure to the mainstream residential market.

"I usually look at stocks with market caps of at least £150 million and these tend to be real estate investment trusts and property developers," he explains.

"I decide which end-markets I like, and then look at the companies and their valuations. I look to see if management has added value over time and whether the company has a strong balance sheet. We meet the companies, do on-site visits and tap into external and in-house research."
Bamberry sets a price target for all holdings, which he calculates on the basis of five-year projections, using profit-and-loss accounts and balance sheets.

"When a stock goes through these targets, I will either upgrade my numbers or sell it," he explains. "I may also reassess the market generally and upgrade the targets."

The fund is currently 28% invested in both office and retail property, while industrial and distribution accounts for 16%. The remaining 28% includes self-storage units and student accommodation.

"I'm keen on offices in London's West End, which I access through companies such as Derwent Valley Holdings," Bamberry says. "It's one of the first areas to start recovering."

The top 10 holdings account for just under 60% of assets under management and illustrate how favoured stocks are given substantial weightings. For example, 8.8% is invested in Unite Group, the student accommodation developer.

Looking to the future, Bamberry continues to favour companies with good, solid balance sheets, and believes the flexibility he has to trade shares gives him an advantage over rivals that invest directly in bricks and mortar.
"I don't think we're going to have a double dip in the economy, but I don't want companies that could end up as distressed sellers or unable to take advantage of opportunities," he says.

"When I want to reposition the portfolio, I can just buy a company that has a good concentration or exposure in a particular area."

Funds focus: SWIP UK Real estate Fund

Manager: Chris Bamberry - Chris Bamberry joined Scottish Widows Investment Partnership (SWIP) in 2002 and manages a number of UK small-cap retail funds, as well as the SWIP UK Real Estate fund. His research responsibilities include the real estate sector.

Before joining SWIP, Bamberry worked for three years at Deutsche Bank as vice-president, equity research, where he was responsible for pan-European business services companies.

Prior to this, he was an investment director in Standard Life Investments’ UK smaller companies’ team. He has also worked at General Accident Investment Management, Baillie Gifford and KPMG.

He holds a LLB (Hons) in law with accountancy from the University of Edinburgh, and is a member of the Institute of Chartered Accountants of Scotland and the UK Society of Investment Professionals.

Fund Facts Name: SWIP UK Real Estate Fund
Scottish Widows
Investment Partnership
33 Old Broad Street,
London EC2 1HZ
 0131 655 8500
Launch Date: May 2006
Fund Size: £10.1 million
Sector: IMA Property Sector
Minimum Investment: £1,000
Minimum Monthly Investment: Not offered by SWIP
Available through platform
ISAble: Yes, but not via SWIP
Initial Charge: 5%
Annual Charge: 1.5%