Finance: Pioneering investments enable Coram Family to spreadrisk

Children's charity the Coram Family is to invest 4 per cent of its portfolio in global real estate investment trusts.

The Chancellor, Gordon Brown, is expected to license the UK introduction of REITs, tax efficient property companies that pay out 85 per cent of their income to investors, in his November Budget.

But Coram has jumped the gun by investing in REITs globally. This is a strategy thought to be the best method for institutional investors, such as charities, to make money out of property.

Biman Mittra, finance director at the Coram Family, said the new investment was part of a broader aim to achieve a balanced portfolio.

"The advantage of investing a small sum in REITs is not so much the prospect of significantly higher returns, but more investing in an alternative asset class to diversify risk," he said. "As a means of gaining exposure to global property, REITs have the advantage of daily liquidity in a traditionally illiquid market and an attractive yield profile."

Mittra, a former investment banker with Goldman Sachs, has spearheaded a new investment approach at the Coram Family, with the charity diversifying into hedge funds and private equity as well as property. It has also shelved benchmark tracking in favour of a total-return approach.

REITs were first created in the US in the 1960s, and are now available in several European countries as well as Japan, Australia and Singapore.

In addition to their expected UK introduction, they are also planned for Germany, Hong Kong and Malaysia. In the past 12 months, returns were 10.2 per cent for North America and 8.3 per cent for Europe.

According to Mittra, REITs also have the advantages of transparency, good access to capital, high levels of corporate governance and low transaction costs.

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