Property funds turn green on climate change concerns

Foresight Capital Management has launched the FP Foresight Sustainable Real Estate Securities fund which would target an annual income yield of 4%

Sustainability has long been a buzzword for stock pickers but the real estate sector is catching up as property funds turn green.

Foresight Capital Management has launched the FP Foresight Sustainable Real Estate Securities fund that will operate as a fund-of-investment trusts, picking real estate investment trusts (REITs) for their sustainability focus.

Foresight said this was the first UK real estate fund of its kind and would target an income yield of 4% a year plus capital growth.

The open-ended fund hopes that investing in REIT shares will mean it avoids the liquidity issues many physical ‘bricks and mortar’ property funds have faced, and the consequent suspensions of those funds at times of heightened redemptions.

The fund will ‘benefit from the resilient growth of trends of real estate assets without compromising on liquidity’ and the weighted average market capitalisation of companies invested in is over £6bn.

When picking REITs for the portfolio, manager Mark Brennan, will ensure sustainability plays ‘an integral role’ and the fund will follow the UN Global Compact 10 Principles, that ensure companies meet minimum fundamental responsibilities in the areas of human rights, labour, environment, and anti-corruption, and four of the UN Sustainable Development Goals to measure the suitability of REITs against.

The fund will invest across Europe, North America, and Asia and focus on ‘resilient’ sectors such as logistics, medical properties, and data centres. However, it will only buy shares in a REIT if the property invested in delivers a ‘net social or environmental benefit’.

Brennan, who also runs the Foresight UK Infrastructure Income fund, said traditional sources of income were ‘under sustained pressure’.

The fund provides global access to sectors of the property market that are well positioned to benefit from modern tailwinds, such as the growth of e-commerce and acceleration of digitisation, which can play a vital role in income-focused portfolios, while directly contributing towards a sustainable future, he said.