There are many ways to invest your money. The best way to look at the different investments available is by asset class. Classification makes it easier to understand segments of investments. There are no definitive rules to breaking each into a segment but it will help you evaluate and compare investments.
Property is an asset class, and property can be divided into commercial property, residential property and rural property. Each of these is a segment of that asset class. When comparing segments you can look at rates of return and investment capitol required. This will help you decide which segment is best for you.
Listed Property trust or LPT managers invest in a portfolio of investment grade commercial real estate to generate high yielding returns for investors, along with buying and selling properties in line with their investment strategy. They are a listed vehicle that can be purchased on the stock exchange.
Australia’s model for LPTs is a recognised world leader. From less than $5 billion in the early 1990s, the sector reached a market capitalisation of $33.3 billion in December 2000, invested in property assets of $46.3 billion. The LPT Index is the fifth largest sector on the ASX, accounting for 5.6 percent of the All Ordinaries Index.
Investors are able to invest in mortgage trusts. These invest in mortgages over residential or commercial properties, Mortgage trust have an advantage for investors of being able to redeem funds at short notice. For this reason, they remain a simple and popular alternative to cash management trusts and fixed term deposits.
The Australian Share market is divided in segments and each share is part of an index. This is a good way to compare shares and performance of those shares. GICS was developed in response to the global financial community’s need for one complete, consistent set of global sector and industry definitions that reflects today’s economy and is flexible enough to change as the investment world changes. The industry groups under the GICS system are;
o Consumer Discretionary
o Consumer Staples
o Financials excluding Property Trusts
o Health Care
o Information Technology
o Property Trusts
o Telecommunication Services
This makes it easier to make comparisons.
Managed Investments offer investors exposure to a professionally managed portfolio of assets through a single security. Investors own a proportion of the investment portfolio commensurate with the size of their investment, and are entitled to any profits and distributions (dividends), but also subject to losses should the value of the portfolio decline.
To compare these managed investments you should look at the financials of each, but a major consideration will be the managed expense ratio of the investment. The MER is the fee paid by the investor in an investment fund to the manager of the fund. The MER is normally expressed as an annual percentage or “basis point” charge (where one basis point equals one hundredth of a percent).
When looking for investments and comparing them, make sure you break each vehicle down into asset classes and segments. It makes for easier comparisons and financial evaluation. to learn more about
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