F&C Ireland has €4.2 billion in assets under management and F&C as a whole has €81.8 billion under management.
The Friends First pension property fund, managed by F&C Ireland, holds €143m in Irish commercial property, mainly offices and retail in Dublin, with a 5% holding of industrial property and 14% in cash.
Investment philosophy
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The overall F&C strategy is active management. “This is based on the belief that markets are inefficient and we can exploit inefficiencies to add value to clients’ funds, through asset allocation and selection of stocks,” Mansfield explained.
As far as the Friends First property pension fund is concerned, F&C Ireland does not trade properties frequently but remains active in other ways. “The portfolio has stayed stable over the years but it is not just tucked away and never looked at. As active managers, we add value by re-jigging leases or we may fund improvements for tenants.”
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Buying and selling
Despite the travails of the office sector in recent years, office properties continue to make up almost half of the fund’s holdings. “There is a high weighting in offices and that served us well up to 2002,” said Mansfield. “Then offices went out of favour and retail was the sector to be in. With a larger fund, you could tailor it to a greater extent but, with a smaller fund, it does not make sense to make huge adjustments because of trading costs.”
At present, Mansfield is not looking to dispose of any properties held by the fund but may consider purchasing a part-share in a Dublin retail venture or a retail property elsewhere in the country. “The (retail) market is so hot at the moment, we have to try to find good property at a reasonable price.”
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Performance
The Friends First property pension fund has delivered 17.7% over the past 10 years, compared with an average among its peers of 15.9%, according to Mercer Investment Consulting.
Over five years, it is up 15.9%, compared with an average of 12.5%, and over three years, it is up 9.4%, compared with 7.1%.
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Outlook
Mansfield expects a continued strong showing from retail and a gradual recovery for office property.
“Certainly retail has been motoring ahead,” he said. “Consumer spending slowed slightly but it has picked up again. The city centre office sector is beginning to recover, but out of town is still quiet, while industrials are quite stable.
“The outlook for the Irish economy is generally good and property is linked to the performance of the economy.”