Real estate investment in the UK does not always mean purchasing a house or apartment that is presumed to be – such investments exist due to specialized real estate funds.
There are two types of such funds in the UK: Open-ended and Close-ended.
Open — ended
These funds are also called-collective investment funds and mutual funds. To create a single asset, such a fund consists of several investors. The investments into such funds are relatively low, and the returns sometimes exceed all expectations.
The fund’s asset is used for developers and purchasing real estate investments.
To minimize the risks such funds hold part of their assets in cash, and most of in real estate and stocks – this is to ensure that, if an investor wants to exit the fund he could take his share without long waiting. However, if several major investors at the same time decide to withdraw money, they will have to wait.
Close — ended
A closed-end investment fund is a publicly traded investment company that receives a fixed amount of capital through an initial public offering (IPO). Despite the commonalities in the name, a closed-end investment fund has little to do with conventional open-end funds.
Closed-end funds raise the required amount of capital only once through an IPO, issuing a fixed amount of units that are purchased by investors as shares. Unlike ordinary shares, stocks of a closed-end investment fund represent a share in a specialized investment portfolio that is actively managed by an investment adviser. Usually, an investment portfolio focuses on a specific industry, regional market, or sector. The stock price of a closed fund ranges according to the market factors (demand and offers), as well as under the value of secure fund’s holdings changes influence.
