Property grabs safe-haven spot with Swiss funds

Swiss fund managers sought solace in property in June, pulling out of all asset classes except real estate amid cascading stock markets and meagre money market returns, latest data from Lipper Switzerland shows.

'Real estate continues to rise while the financial markets are tanking. Investors see it as the new safe haven,' said Edgar van Tuyll, strategist at private bank Pictet & Cie.

Fund managers siphoned more than 2.5 billion Swiss francs ($1.68 billion) out of funds, according to fund tracker Lipper, with 981 million coming out of equity funds, 818 million from balanced funds and 643 million from money market products.

Only real estate, with inflows of 127 million francs, saw any new client money.

'Valuations are much better for real estate than for other financial markets,' Van Tuyll said. 'Plus real estate has defensive qualities. Its fixed annual income through rent gives it the appeal of a stock with a high dividend yield.'

Van Tuyll said European real estate equities were currently returning four percent compared to 3.1 percent on the equity market overall and 3.3 percent on the money market.

But Beat Gerber, manager of balanced funds at Swissca, fund manager for the Swiss cantonal banks, warned investors that propertyÂ's popularity may turn out to be just another bubble.

'At the moment the going is good for real estate, but IÂ'd be a bit cautious. We could see some overheating,' he said.

The total invested by Swiss fund managers, including changes due to market movements, dipped 4.8 percent to 432.4 billion francs in June from 454.3 billion in May.

Some investors, fed up with the poor returns, withdrew from money market funds. But the funds, which have proved to be a popular waiting room for cash amid market turmoil, still account for 23 percent of the total invested.

'There are a lot of investors who were more than happy to hold cash, and latest figures show they were right. The longer they wait to invest, the deeper the prices go,' Gerber said.

(source: Reuters)

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