Pension gearing - good idea?

[onekeano]

Came across this being advertised at the weekend and was interested in moving some funds from a previous employers fund that is winding up.

[broken link removed]

Just wondering if anyone had dealt with Oregon Financial before or what views people had to suitability with such a fund. Seems to be a reasonable product with a long lease blue chip client.

Are there any specific questions I should be asking of Oregon in relation to this product?

Any advice appreciated.

Roy

 

[Friday]

The main question that needs to be asked is a breakdown of the acquisition costs of the property. The normal legal, stamp duty etc should be itemised. The promoter of these syndications will not directly charge you a fee for investing but will add their margin to the acquisitions cost of the property, i.e. an €8m property may end up costing €9.5m. You need to get an idea of how much these costs are to make a fully informed decision.

Gearing is a good idea where you understand the additional risk element and are prepared to take that risk to obtain higher returns. However, gearing will also multiply losses in a falling market. However, for long term investments such as pension funds I believe gearing is a welcome addition to investment options available to pension fund investors.

 

[onekeano]

Friday - thanks for the reply and your comments which are appreciated. In the brouchure whcih I sent a a link they indicate a "3.5% charge on Pension Fund transfer / Contribution to geared pension fund" - would this level be the norm?

They also indocate a rental yield of 5.8% which is probably ok but the interest rate they quote is 6% which I would have thought was high?

They also assume "both the Property and the Pension Managed Fund appreicate by 5%" which I would have thought was on the optimistic side.

Roy

 

[Friday]

The 3.5% is just a sales charge. The promoters fee is in the acquisition cost - it may be identifiable in the prospectus.
Interest rate is about 2.3% over LIBOR.

Can't say I agree that a 5% projected returns seem over optimistic.