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Brooks Macdonald Funds announces TER cap for ground rents fund


Brooks Macdonald Funds Limited’s (BMF) Ground Rents Fund has enhanced its return to investors by capping its Total Expense Ratio (TER). As a result, the TER cap stands at just 2% for Class B shares.


BMF anticipates significant investment into the Fund on the back of the 2% TER cap which BMF has committed to underwrite. The size of the TER is important to investors as it reflects the costs coming out of the Fund, which can impact returns. These costs consist primarily of management fees and additional expenses such as legal fees, auditor fees and other operational expenses.

The fund’s portfolio includes commercial Ground Rents but primarily focuses on residential property. These are long-dated UK Ground Rents which enable investors to benefit from a secure and predictable income stream, which in many cases is linked to an underlying RPI index or a doubling over a fixed period of time. At 30 June 2011 the Ground Rents in the portfolio provided a yield of 5.6% with additional income in excess of 1% from the active Asset Management which Braemar Estates, the Hale-based property arm of Brooks Macdonald Group, provides. Braemar Estates manages over GBP750 million of leasehold properties.

James Agar (pictured), Development Director for Brooks Macdonald Funds and Braemar Estates, says: “Ground Rents have always been a very stable and investable asset class in which we are seeing increasing interest from both institutional and retail investors. Looking at Ground Rents in the context of the current and the predicted future financial environment, they provide investors with a very safe form of real estate investment, as well as offering a much greater return than index-linked gilts.”

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