Hi Q offers high income despite falling yields

Real Estate Capital Partners (RECP) has launched a new-style property investment fund designed to mitigate market conditions and continue to provide high income, even when property yields are falling.

Using an overlay structure on top of its flagship Real Estate Investment Fund (REIF), Hi Q utilises derivatives funds managed by UBS (20-25 per cent), listed securities managed by SG Hiscock (55 per cent) and unlisted securities (20 - 25 per cent) managed internally.

With a forecast annual distribution of 10.63 per cent, “the fund can generate income in any market environment”, said RECP chief executive officer Andrew Saunders.

Because of the fund’s income and capital growth characteristics, he said it is particularly attractive to the 55 years and older demographic, who are looking to consolidate their retirement and investment savings.

Saunders said the fund had been launched in response to investor demand, with RECP having noticed that many REIF investors were looking for high income combined with the capital growth traditionally provided by property securities, with the equities market leaving a significant gap in this regard.

“Financial planners have told us that many investors in our flagship fund REIF are attracted to the regular income it provides and see capital growth as a bonus rather than a given.

“Hi Q was developed to lock in this income stream by securing the income returns, relinquishing a portion of the capital growth, while not increasing the overall level of risk,” Saunders said.

He described Hi Q as “an intelligent way of attacking the property securities market”, pointing to the 23 per cent return of the REIF last year as an indicator of the new fund’s expected performance.