How To Invest In Commercial Property Funds

Most good financial advisers will tell you commercial property funds are an important part of any investment portfolio.

But what are commercial property funds? And what role do they play in the success and failure of a portfolio? This article will explain everything you need to know regarding these funds and how to avoid making mistakes when investing in them.

Let’s get started.

What are commercial property funds?

The commercial property fund is run by a fund manager who invests in bricks and mortar property of a commercial nature.

Warehouses, factories, offices, shops are all examples of these kinds of properties that are rented by businesses and pay quarterly rent on a fixed term. They provide a good yield (around 4%) and have been historically used in a portfolio of investments to help reduce the volatility and the risk of that portfolio.

Let’s look at how this works.

A safeguard against volatility

Commercial property funds, like fixed-interest funds (Gilts, corporate bonds, high yielding bonds) do not move regularly in the same way as equity markets do. In fact, they have the lowest coloration to the stock market of any funds available.

This is good news for a portfolio. It means that if the stock market goes down, commercial property funds may be stable, or even rise.  

Because of this they can act as a safeguard against volatility and are a great example of diversifying your portfolio. We discussed diversification and why it’s important in a recent blog which you can read here.

But it’s also worth noting that as they are not always prone to the lows of the stock market, they also do not experience the highs in the same way either, so it’s important to find the right balance between both property funds and fixed income and equity funds in your portfolio.

Another thing about these funds is that they can sometimes be difficult to trade out of.

The suspending of commercial property funds

Commercial property funds can be illiquid. This means that there are times, such as now, where you will not be able to trade in or out of a property fund because its trading has been suspended.

So why does this happen?

During uncertain times it’s difficult to accurately value a property. As all commercial property funds are valued on the rent as a return on investment, if the future of that rent comes into doubt, then trading must stop until it stabilises again and the properties can be valued fairly. It may also be that there are a lot of redemptions from the fund, so a manager briefly suspends training.

So when should you look to bring commercial property funds into your portfolio?

Typically, most of my clients have a mix of commercial property funds and fixed interest funds in their portfolio, as well as equities. Unless you are looking to take 100% equity risk, the most aggressive and risky kind of investment, then you would need them for diversification and to help reduce risk.

It’s important to know the benefits of commercial property funds and how they can affect your portfolio but each individual is different and you will need to know which mix is right for your portfolio. That’s why I would always recommend speaking with a good independent adviser first to avoid any mistakes or misconceptions.

Let’s look at some of these common misconceptions now so you can avoid them in the future.

Property shares vs commercial property funds 

Being an independent advisor for over 30 years, I have seen many clients come to me with worries and misconceptions about property funds. Of course, it’s normal to have worries so don’t worry,  here are a few of the most common ones explained to help you avoid them.

  1. Some clients assume that funds will be invested in residential properties. This is not the case. All property funds are invested in commercial properties and own the building themselves.
  2. It’s important to differentiate between investing in property shares and the properties themselves. Some property funds are available that just invest in shares but they do not provide the same diversification, reduction in risk, and volatility because they are holding equities.

So if you are trying to diversify away from equity funds there is no point buying property shares.

Sometimes clients are unaware of which type of property fund they are buying and can be very disappointed when they see a big reduction in the value of a property fund. This would happen because it was a holding fund and they didn’t know, or were perhaps advised poorly. 

This is why you should always speak to an independent adviser first. It’s their job to research the funds, talk to the fund managers and advise clients accordingly and they can help you avoid making these big mistakes.

But there is nothing wrong with doing your own research too and if you are the curious, hands-on type here are a few useful pointers to remember:

A high cash holding isn’t good for the long term

Assessing the cash holding of a property fund is very important because if a client is looking to make a withdrawal and the fund doesn’t have enough money then the fund must sell a building.

And if you have ever tried to sell a property before, you will know it takes a long time. You could be waiting months before you actually receive your money. 

This is why these funds normally have to keep a much higher level of cash. For example, most property funds would traditionally keep around 15% of the fund in cash for pay-outs should investors wish to make withdrawals 

But this can cause a problem as a high cash holding isn’t good for the dividends the fund pays and the capital growth. If say 25% of the portfolio is in cash, it’s not being invested in the building and it’s not going to grow in capital value. This can impact your returns and income from the fund.

So it’s always worth looking at the cash holding of a property fund.

So, to recap, having commercial property funds is a crucial part of most investment portfolios (unless you like to live dangerously). They help reduce risk and volatility and typically make a good, consistent return from their fixed rates and rent pay-outs.

However, they can be an issue during times like these. When businesses have closed and  buildings are empty you may find yourself unable to trade for some time in these markets.

Understanding the pros and cons of these funds and being able to avoid the common mistakes made when investing in them is always useful but as I always say, it’s worth having a quick chat with an independent adviser to get the best advice and avoid making any mistakes

I hope this has been useful and if you have anything else to add I’d love to hear from you. To find out more feel free to get in touch by emailing

The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article, or alternatively contact the Applewood Independent Ltd office on 01270 626555.

The value of property investments and income from them can go down as well as up and investors may not get back the amount originally invested. 

As property is a specialist sector it can be volatile in adverse market conditions, there could be delays in realising the investment.

How to Survive Redundancy and Job Loss

There is no doubt that the 2020 pandemic has made a lot of people worried about their financial situation.

In many cases, this is due to a considerable number of people having been put on furlough, being made redundant, or have lost their jobs due to the effect COVID-19 has had on our economy.

When things like this happen and you’re facing redundancy, or perhaps looking at early retirement, it’s important to be able to seek expert advice in order to gain a foothold in your financial position. 

This article will look to cover some of the reasons why it’s so important to get the right advice during times of redundancy or job loss. It will also seek to provide you with some useful information on what you can start doing to feel in control during unsettling times.

Redundancy – a motivator for retirement 

At Applewood Independent Ltd we have seen a large increase in our existing clients who have decided that now is the time for them to retire.

Having been at home for a while on furlough, or perhaps having been made redundant, they have asked us to structure their portfolio in a way that gives them enough income so they can take on a relaxed, early retirement. 

Even though they are retiring early, they still want to live their life to a certain standard and so we must look at a way of managing their investments and pensions to provide them with that same quality of life.

And it’s not just with our existing clients either.

More and more, we have started getting a lot of enquiries from people who are looking to make the same switch. Some, due to age or experience, don’t want to find a new job. Others have just enjoyed being at home so are looking to retire either partially, or full time and enjoy the rest of their lives.

This is when an independent financial adviser is worth their weight in gold. 

Let’s explore why.  

Pensions – the smooth transition into retirement

When facing redundancy, it’s important to understand the need to take financial advice on your specific situation, especially when it comes to pensions.

Most people we have worked with have not just worked for one firm over their careers, therefore, will not just have one scheme. I have seen as many as eight different pension schemes that an individual has been paying into since the start of their career. And that takes a lot of work to keep organised. 

Those pensions all need to be allocated correctly so they are serving you best and this can differ from person to person. Does it need to be left where it is or do you need to move it into something more personal? Perhaps it can be transferred to a new employer if you find a new job?

That’s where a good independent adviser will provide help to you. They can assess all the options and aim to build a flexible retirement plan that will give you the income you need to enjoy your life without worrying about redundancy and what will happen once that inevitable phone call comes.

But it’s also important that these retirement funds have the potential for growth on that capital as well. A good independent adviser will know how to keep your pension fund working hard for you by building a plan with good growth potential for years to come.

But it’s not just the pension schemes that we need to look at when facing redundancy.

A growing pot for the future

If you have an existing investment portfolio already or perhaps a lump sum from a redundancy package, it’s important you are making that capital work as hard as it can for you.

For instance, if you have been recently made redundant and have a substantial amount of redundancy pay to invest, it’s always worth looking for advice as to what you should do with those funds. In many cases, the choice depends on employment status.

Let’s say you have the opportunity to go into a new job and don’t need those funds to live off. Then, there is a great potential for investing those funds to grow for the future. It can be a very nice growing pot that can help massively when you finally do reach retirement.

It’s important to note at this stage that everyone’s financial position is different. If you are in a position where you have acquired a new job after redundancy then you will be using your funds slightly differently than someone who is looking at retiring directly after being made redundant (as explained above).

But being employed or not, a post redundancy financial plan that is tailored and specific to your situation is important to have and it’s key you start to think about it if you are facing redundancy or already in it.

Debt reduction – protecting yourself 

So what are some things you need to consider when making these plans and how can you begin to protect yourself financially against redundancy and job loss?

Well firstly, if you have been made redundant the most important thing to consider before looking to invest those funds is debt reduction. For those who do have debt; credit cards, loans, and mortgages for example, it’s important to first focus on these. By doing so it will reduce your monthly outgoings and is a very good first step for financial planning. 

And now is a great time to start reducing debt as I think a lot of people have been able to save a great deal of money during the last six months.

With trips away cancelled and the limitations on the opening hours of bars and restaurants, a lot of our leisure expenses have been avoided. This provides a good opportunity for people to use some of those saved funds to begin to start reducing debt. If you can, you will be in a good place to start protecting yourself should you be made redundant now or in the future.

A nudge in the right direction

Of course, everyone’s situation is going to be different. Some of us have a lot more debt than others and it’s unfair to adopt a generic approach to offering financial advice.

Most people just need a nudge in the right direction. Many know what the right thing to do is but for some reason avoid doing it, look at writing a Will as an example. You know you should but many people, for one reason or the other, don’t ever do it.

This is also true for pensions and financial planning. So if you are facing redundancy, and haven’t already started to make a plan for the future, get in touch with an independent adviser and start protecting yourself now.

I hope this has been useful.

If you have any questions about redundancy feel free to give us a call on 01270 626 555 or email us at  We would love to hear from you. 

More to come next week.

The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article, or alternatively contact the Applewood Independent Ltd office on 01270 626555.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

Your capital is at risk, you may get back less than you originally invested.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits.

Accessing pension benefits is not suitable for everyone. You should seek advice to understand your options at retirement.

How To Take Control Of Your Pensions

Flexible access pensions (flexi-access) are changing the way people think about traditional pension schemes. Not only can they offer a wide range of financial benefits, but they can also give you much more personal control over your funds allowing you to feel confident, and secure about the future.

So, what exactly are flexible access funds? And what are the benefits of transitioning to one when looking into retirement?

This short article will be a helpful guide in helping you understand exactly what flexible access pensions are, and why you should be using them.

Avoiding a heavy tax bill

In 2015, a surprising new set of rules came out which changed the world of pension planning. 

It stated that everyone over the age of 55 who was legally allowed to start making pension withdrawals would be able to draw out any amount of their pension funds at any given time. 

Perhaps what they were hoping for was that everybody with substantial pension funds would just draw the whole thing out in one lump sum.

It would certainly have been a nice payday for the government. They could cash in on the huge amount of revenue generated from taxing these pensions as income.

However, what actually happened was that a lot of people started steering towards financial advisers to find ways of taking out their money in a much more sensible manner. By doing so they could avoid the heavy tax on large withdrawals, but also use the benefits associated with these new rules. It created a win-win.

So, how does this work?

It’s like a taxable bank account

Essentially, if you are over the age of 55, you can start treating your pension like a taxable bank account. If you want to take money out, you can. You just pay the tax on what you have withdrawn. Nice and simple, right? 

It’s as if you are paying yourself a salary, say £20,000 per year, but without paying national insurance tax. You just pay your standard basic rate tax. This alone is an attractive prospect for those of us looking to move into retirement as it offers a lot more flexibility when it comes to managing your post-career income. 

And on the topic of tax, it can get even better because one of the big benefits when looking at flexible access is the tax-efficient drawdown.  

Let’s take a look at what this means.

Tax-efficient drawdown – making every penny count

Anyone looking at making withdrawals from their pensions will know that you can withdraw up to 25% tax-free cash. Of course, you can take this out as one lump sum which some people do. 

Though, many people don’t actually need all that cash. If you have paid off your mortgage(s) and don’t have any substantial debt, that 25% can be a lot more useful than just sitting in your bank account.

As an example only, lets say you put 25% of a decent pension into your income and take £20,000 per annum. In this case, only around £15,000 of the £20,000 is taxable, and you only pay tax on what’s over the personal allowance which is £12,500. So you only actually end up paying a 20% tax on £2,500.

So, on a £20,000 per year pension, you have £19,500 after tax. 

This is a hugely attractive prospect to anyone and is one of the great benefits of a flexible access pension that isn’t possible on an annuity. Annuities do not allow you to use any tax-free allowance to create tax-free income, on an ongoing basis in the same way. 

It’s important to understand this and begin to look at making a shift if you are in an older pension. 

Apart from saving a great deal and generating a tax-efficient drawdown, flexible access pensions offer other great personal benefits too. One of the most significant being the fantastic death benefits they offer.

Death benefits – looking after your family

Flexible access plans are great for generational planning because the money can be passed down, in many cases, without inheritance tax. 

For example, if you died before the age of 75, with a flexible access pension your dependents don’t pay inheritance tax. This is great. It means they can access the entire fund for free if you’ve got less than the lifetime allowance. This is for your spouse, kids or anyone else you want to leave money to.

Older pensions are far more rigid. Should you die in the early stages of an annuity you may find that a lot of your pension will be absorbed by the provider. For example, a £100,000 pension paying out £3,000 a year with a 10-year guarantee may pay out the 10 years (£30,000) if you were to die early. However, the remaining funds will go back into the pension, not to the family.

Nowadays, nobody seriously considers annuity because they all want death benefits for their beneficiaries. Normally annuities are set up at only 50% to the spouses, which doesn’t make much sense when you realise you can have all the remaining funds passed over to you with a flexible access pension.

So, how does one get a flexible pension?

Speak to an adviser

Many people will read online about these new benefits but find they are unable to use them as their old pension is unable to facilitate flexi-access which is why more and more people are using good independent advisers to help them make the switch. 

But a good adviser can also make sure that the funds are being managed well and that you don’t take any unnecessary risk by trying to cut corners.

Let me give you an example.

Don’t leave yourself exposed to the stock market

One the cheapest routes out there to manage your pension funds would be to buy a UK market tracker fund. This will save you about 0.5% a year but it’s a risky game and can leave you very exposed to the volatility of the stock market.

So, I’d always recommend you go to a good adviser and build a strong portfolio that can mitigate the risks through effective diversification and asset class management. We talked all about this in a recent blog, which is a great resource for those looking to read more on the subject.

You get to decide

In summary, moving to a flexible access pension is possibly a good idea. It provides a great number of financial benefits as well as gives you a real sense of control over what happens to your funds should the worst happen.

But also, flexible access gives you back control of your own money. You get to decide how much to withdraw and how much to keep in. If your portfolio performed well last year, great! Treat yourself to a nice bonus and enjoy your retirement. 

Ultimately you get to decide what to do and as your income requirements shift and change with age, you can adjust your budget to fit in a controlled personalised way.

I hope this has been useful and if you do want to find out more feel free to get in touch by emailing me at 

More to come next week.

The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article, or alternatively contact the Applewood Independent Ltd office on 01270 626555.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits.

Accessing pension benefits is not suitable for everyone. You should seek advice to understand your options at retirement.

The Financial conduct authority does not regulate taxation advice

A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.

The Makeup of a Successful Portfolio

A successful portfolio is defined by whether it achieves the individual’s personal objectives. But no matter the individual, the success of a portfolio always falls down to the fact that we, in the role of the financial adviser, have got to make our clients more money than they would make from their existing pension or in National Savings.

So, in any portfolio, the same questions have to be asked. Where are we going to find this performance, and how efficiently can we create it? This article will help you understand what makes up a successful portfolio and how we can minimise losses and maximise gains.

Asset classes

A successful portfolio always comes down to the mitigation of risk through diversity of asset classes and geographical regions. David went into much detail in his recent blog, How To Beat The 2020 Stock Market,’ so you can read up on this in more detail.

In a nutshell, when it comes to diversification, there are four main asset classes:

  1. Cash
  2. Fixed interest
  3. Commercial property 
  4. Equities

It’s worth spreading your money amongst all of these because while equities traditionally have made the most money over the longer term, they are more exposed to the stock market’s ups and downs. In the global market drop of the pandemic, no equity was safe, yet our clients’ fixed interest pretty much stood still, and their commercial property funds went up!

That’s why diversification is essential. A successful portfolio has access to all of these different asset classes, and a good adviser will be able to move funds into various asset classes to keep your funds safe.

Global equities

However, being able to diversify into different asset classes isn’t enough to build a successful portfolio alone. You should also look to split equities between the UK market and other international markets.

Let’s call these international assets ‘global equity’.

Global equities can be from anywhere abroad but are typically made up of US, Asian, and emerging markets like Brazil and Russia. So, having funds in global equities is an excellent way of benefiting from stocks worldwide when there is a downturn or when the UK market struggles. It means you may still outperform the stock market and mitigate risk

Look at what is good value

As important as it is to a successful portfolio, diversification still depends on buying value within the funds. It’s crucial to be constantly aware of both the best and worst-performing stocks when making a buying decision for your portfolio.

Don’t necessarily be put off by a fund’s poor past performance; instead, look at its potential value. Because history has shown that markets have always recovered. If there is a poor performer in your portfolio we would always speak to the fund manager who is far more interested in its long term performance than how it performs over three to six months. We’ve seen some poor performers over twelve months blow the doors off competition once their shares come home to roost!

Always try to approach investing with a pragmatic rather than an emotional mindset.

Don’t get emotional

Making emotional decisions may be the worst thing you can do in an investment.

The best performer of last year may not perform this year, and although it would be tempting to invest heavier in it, it’s not always the best move. Additionally, last year’s worst performers shouldn’t be sold just to cut a loss. They may well become high performers down the line.

So, yesterday’s winners aren’t necessarily tomorrow’s winners. That’s why you need to make sure you are   to help you navigate these risks effectively.

High risk does not always mean high performance

Managing risk is a crucial part of building a successful portfolio. Some people prefer to have very little market exposure, while others set risk levels that can set your hair on fire!

For my clients, the funds that have made the most money tend to go hand in hand with the biggest risk. Our 10 out of 10 portfolios usually outperform our 6 out of 10 portfolios over the longer term.

However, high risk doesn’t always mean high performance.

That’s where a good independent adviser comes in. Quite often, whenever we compare existing portfolios, we’ve produced the same or better returns, having taken less risk. So our 6 out of 10 portfolios have sometimes outperformed other portfolios that have had 10 out of 10 ratings!

It’s the adviser’s experience and the diversification of the portfolio that makes all the difference.

Be prepared to accept loss

That doesn’t mean our client’s portfolios are a series of constant wins. You have to accept the world as it is when it comes to building a successful portfolio. A fund over 10 years will always have its good and bad years, and the most successful portfolio accepts that there will be losses to create future years of growth.

You’ve got to be able to create a portfolio that is diverse and robust enough to ride out the worst times and capitalise on the good times. The world is always going to generate times of crisis. History repeats itself.

Set up to ride out the bad times

But bad times don’t always happen every year. In between these years, there are times of growth. Big companies like Apple, Amazon, Vodafone, and Shell pump up the markets, so there will always be growth opportunities after a decline.

If you don’t accept that inevitable downturns are realistic, however, and if your portfolio isn’t set up to ride out those bad times, you expose yourself to unnecessary risk. I’ve seen this happen a lot during the years before the pandemic.

Personal investors without an adviser made some great returns during that period of growth after the 2007 credit crunch. During a crisis like now, many of the very same people are left overexposed and making significant losses in record-breaking time.

What will happen tomorrow?

That’s where the sophistication of a successful, diversified portfolio shines through. We have ended up taking less risk with our clients and still producing very decent returns by looking at how we dealt with past downturns.

In fact, our portfolios have performed exceptionally well against the markets recently. That’s the difference between working with a good adviser and just reading the pink pages or browsing the web. It’s about using an advisers’ infrastructure and knowledge of the market to help answer the golden question that many don’t know the answer to.

What will happen tomorrow?

It’s impossible to know for sure, but we can aim to lose as little as possible during the downturns while still making money when the markets go back up. That’s the key to a successful portfolio, making long term gains without taking enormous risks.

So make sure you are diversifying into different asset classes and geographical regions and keep a pragmatic mindset when it comes to making decisions. And above all, make sure you use the experience of a good independent adviser to help you.

I hope this was useful. Feel free to email me for any further information at


The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article, or alternatively contact the Applewood Independent Ltd office on 01270 626555.

The value of an investment can go down as well as up. Past performance is not a guide to future performance.

Applewood Independent would like to update everyone

Applewood Independent would like to update everyone on their operations during the current Covid-19 restrictions.

With the current Coronavirus situation and the UK now in Lockdown 2.0, Applewood Independent continues to take the outbreak extremely seriously.

Our top priority is the safety and well-being of our team members, clients and their families.

We have put proactive measures in place to manage our business accordingly, to ensure that we can continue to offer a full service to our clients now and in the future.

As a result, our digital communication is now in full operation, with all face to face meetings cancelled and instead delivered via Zoom or telephone call. We have also taken steps to ensure our team can remain fully operational, with some team members being provided with computers to enable them to work from home in an effective manner.

We have also established new ways of working within our offices to maintain social distancing, with screens being installed on all desks, a new one-way system introduced, extra cleaning and disinfecting implemented and a whole new air conditioning and heating system to reduce the spread of Covid 19 within the office by increasing the rate of air change and eliminating recirculation of air.

We would like to thank you all for your understanding, cooperation and support during this period.

If we can assist you in any way, please contact us.

Stay Safe – From all of the team at Applewood Independent.

Applewood are proud to again be sponsors of the Nantwich Tree & Lights

Due to the current Government restrictions, the usual annual Christmas Lights switch on in Nantwich couldn’t go ahead as usual.

However, yesterday evening David Pritchard and Alex Pritchard, Managing Directors of Applewood Independent, joined the Mayor of Nantwich, along with local keyworkers to switch the lights on around the town of Nantwich.
As we can all appreciate, this year has been a strange one, which has proved difficult for many people. But what we have seen is our wonderful community pulling together.

At Applewood Independent we are once again proud to be sponsoring the Nantwich Christmas Tree & Lights. We hope this year’s Christmas Tree and the rest of the fantastic decorations around the town bring some cheer to all residents and visitors during the festive season.

Stay safe everyone and Merry Christmas from all of the team at Applewood Independent.