Geared vs non-geared commercial funds

Z

z106

Guest
Why are some funds not geared?
I presume there's some logic to it but i DON'T KNOW THAT MUCH ABOUT THESE FUNDS.
bUT WHY ON EARTH WOULD these funds operate non-geared ?

Yes you are limiting risk - but at the same time..is it not a bit mad surely to at least not go for some bit of gearing?
(I am aware that many are geared - but a surprising amount aren't)
 
Maybe some funds don't have access to gearing?
Maybe the cost of gearing is too high?
 
Hmmmm....I'm not convinced
There has to be some other reason.
 
CCOVICH's suggstions seemed reasonable to me. Since you remain unconvinced surely you have some inkling of what you think is the "real" reason? If not then why are you unconvinced?
 
qwertyuiop said:
Yes you are limiting risk - but at the same time..is it not a bit mad surely to at least not go for some bit of gearing?
Click to expand...

You've answered your own question. Different investors, in different circumstances, have different appetites for risk.

Few small investors have the money to buy investment property for cash. By pooling their money in a fund, they can do that. There is lower risk to capital from a fall in property values, no risk from a rise in interest rates, and all rental income goes back into the fund instead of servicing loans. If the rental yield is decent, one can get a modest return above deposit rates and any increase in property values is icing on the cake.
 
Those funds are for people who want an income right now.
They would be aimed at retired people who have no further need to grow their capital.
 
Ya - that sounds more plausible.
I like that answer.

Well done woods and gonk.
 
You must log in or register to reply here.
Back
Top