Fund downgrades from the commercial property and commodity sectors

As we look to focus our research coverage on funds that we have conviction in, we’ve now considered the commercial property and commodity sectors.

For funds in which we have no real conviction, or where the investment case for them no longer aligns with our investment philosophy, we have downgraded them to one star.

Below we give you an overview of the funds that we have downgraded, including their star rating before the downgrade and our rationale behind the downgrade.

Aviva Investors Property 

We have lower conviction in this fund compared to other options from the sector, such as Henderson UK Property and M&G Property Portfolio.

Schroder Real Estate Investment Trust (SREI) 

We have greater conviction in other funds from this category, including the F&C Commercial Property Trust (FCPT) and UK Commercial Property Trust (UKCM).

Standard Life Investors Property Income Trust (SLI) 

We have greater conviction in other funds from this category, including the F&C Commercial Property Trust (FCPT) and UK Commercial Property Trust (UKCM).

First State Global Resources 

We initially downgraded this fund in 2014 after our asset allocation committee decided to zero weight the commodities sector. After the downgrade, we left the rating of the fund as ‘hold,’ because its experienced management team offered broad exposure to mining and energy sectors. But recently, lead manager Dr Joanne Warner announced her retirement and as a result of the manager change we have downgraded the rating to one star.

Guinness Global Energy  

This is a concentrated global energy fund. Given the continued volatility and outlook for energy markets, our preference is for broader commodity exposure via the Investec Enhanced Natural Resources fund.

To see our top-rated funds, including funds from the commercial property and commodity sectors, please visit here.

If you have any questions please give us a call

If you would like to know more about our recent fund downgrades or you have questions about your investments in general, please call on 020 7189 2400, email best@bestinvest.co.uk or request a call back.

Important information

This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Funds which invest in specific sectors may carry more risk than those spread across a number of different sectors. In particular, gold, technology and other focused funds can suffer as the underlying stocks can be more volatile and less liquid.

The property market can be illiquid; consequently, there can be times when investors will be unable to sell their holdings. Property valuations are subjective and a matter of judgement.