Schroders launches new European funds

Schroders Property Investment Management has launched two new funds of funds to enable investors to diversify beyond their national markets. The European Fund 1 will invest in unlisted property funds across Europe, while the Continental European fund 1 will be aimed primarily at UK investors but will exclude real estate in Britain.

Both funds will be based in Luxembourg and will be closed-ended with fixed lifespan. This is designed to minimise the length of the investment period and to avoid the problem of later investors diluting the founding investors. Each fund will be limited to €250 mln.

Schroders said that the commercial property market in Europe is about three times the size of the market in Britain so that the fund-of-funds model will give investors a diversified exposure to a portfolio containing some of the best European property funds. These will be selected from Schroder’s database of over 500 funds.

The company has already secured more than €100 million (£67 mln) from investors for the funds.

'We deliberately chose a closed ended structure as we felt open ended vehicles provided very limited liquidity at the expense of investment return and the interests of the long term holders. Instead, we aim to operate a secondary market for units in the fund in the same way that we have pioneered for our UK fund range where we have traded over £1 billion in the three years to December 2005, said Mike Clarke, Schroders head of property distribution.

Schroders had €176.8 bn under management in 30 June 2006 and manages proeprty funds with a total value in excess of €10.7 bn.