Benefits of Residential Property in SIPP
A range of clients may benefit from using the TM Hearthstone UK Residential Property Fund within their SIPP. Broadly, they will fall into one of the following categories:
Diversification: Residential property has demonstrated historically that it can enhance the risk / reward characteristics of a portfolio due to the fact it has demonstrated low correlation with other traditional asset classes such as equities, fixed interest and cash. It also demonstrates different performance characteristics to commercial property.
Access to Real Assets: Residential property provides potential inflation proofing over the medium to long term due to the fact it is a real asset. Capital values and rental income have the potential to increase as the cost of living and earnings rise.
An Income Stream: The fund provides those investing larger amounts with access to income distributions which may be used to cover their SIPP charges and / or to provide an income if they are drawing income from their SIPP. Those investing smaller sums may access the income through redeeming some of their accumulation units in the fund.
Buy-to-Let Investors: There are many investors who have missed out on the tax benefits available on pension contributions due to their mistrust or misunderstanding of pension schemes, or due to the volatile nature of equities that make up the majority of pension fund assets. Being able to invest in a residential property fund via a pension scheme may be the incentive many of these people need to start saving in a tax efficient pension scheme for their retirement.