This is a financial promotion for The First Sentier Global Property Securities Strategy. This information is for professional clients only in the UK and Switzerland and elsewhere where lawful. Investing involves certain risks including:
- The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
- Currency risk: Changes in exchange rates will affect the value of assets which are denominated in other currencies.
- Single sector risk: Investing in a single sector may be riskier than investing in a number of different sectors. Investing in a larger number of sectors helps spread risk.
- Single country / specific region risk: Investing in a single country or specific region may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
- Charges to capital risk: The fees and expenses may be charged against the capital property. Deducting expenses from capital reduces the potential for capital growth.
- Property securities risk: Investments are made in the shares of companies that are involved in property (like real estate investment trusts) rather than property itself. The value of these investments may fluctuate more than actual property.
- Emerging market risk: Emerging markets may not provide the same level of investor protection as a developed market; they may involve a higher risk than investing in developed markets.
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As the renter market in the United States continues to grow, so does the opportunity for investors in a certain type of Real Estate Investment Trust.
Changing demographic and lifestyle preferences of people in their late 20s and early 30s, coupled a lack of a savings among people in this group and rising mortgage rates, points to an expanding renter market in the United States.
People are getting married later – 32 on average compared to 22 years old in the 1970s1. Meanwhile, this next generation of would-be home owners are graduating college with the highest levels of student debt on record2; almost half of millennials having no down payment savings at all, according to the US Census Bureau.
These demographic shifts are set against the backdrop of higher mortgage rates and affordability ratios not seen in 20 years3.
This confluence of factors is likely to expand the renter market in the US, which could present an opportunity for investors in single-family residential REITs.
Unlike in 2008, when the US residential sector was at the centre of a sub-prime market collapse, investors are now looking to select segments of US housing to capture durable cash flows and sticky tenancies.
Amid a potentially worsening economic situation, the single family rental category is well positioned to produce reliable earnings. Tenants within the single family rental space have historically been duel income earners with kids in school might be less likely move in light of one job loss or any sort of growing uncertainty within their household picture.
Further, it’s within this category owner-operators are adopting smart tech, meaning they are able to manage and control their expenses better. This typically includes centralised monitoring stations that allow them to track and real time energy and water usage across their assets and reduce costs.
1 U.S. Census Bureau
2 NCES – National Center For Education Statistics
3 National Association of Realtors
This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered. It does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of issue and may change over time. This is not an offer document and does not constitute an offer, invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document.
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References to “we” or “us” are references to First Sentier Investors a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including loss of income and capital invested.
If this document relates to an investment strategy which is available for investment via a UK UCITS but not an EU UCITS fund then that strategy will only be available to EU/EEA investors via a segregated mandate account.
In the United Kingdom, issued by First Sentier Investors (UK) Funds Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 143359). Registered office Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB number 2294743. In the EEA, issued by First Sentier Investors (Ireland) Limited which is authorised and regulated in Ireland by the Central Bank of Ireland (registered number C182306) in connection with the activity of receiving and transmitting orders. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland number 629188. Outside the UK and the EEA, issued by First Sentier Investors International IM Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registered number 122512). Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB number SCO79063.
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