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Investment Performance and Tax

What happens if property prices fall?

As the value of the fund is very much determined by the value of the properties it owns, if property prices fall so will the value of your investment in the fund. Income from rents and any cash held by the fund may offset the fall in property values by some degree.

Hearthstone’s team of residential property experts invests in a range of property types across the UK, particularly seeking areas where we believe house prices and private rents will increase in value. UK residential property has a long history of providing attractive, stable returns, but house prices do fluctuate, and the fund should be considered as a medium to long-term investment of at least five years.

How is share price calculated?

The share price is calculated as at 10:30pm every day by the fund’s accountant, Northern Trust. The calculation broadly adds up the value of all the fund’s properties and cash, take away fund and property management expenses, and divide the result by the number of shares in issue.

However, if the fund has more new investors coming in (and so expects to buy more properties), there will be an upward adjustment to the share price (known as ‘offer pricing’) to allow for the costs of buying the new properties. If the fund has more investors leaving (and expects to have to sell properties to meet redemptions), there will be a downward adjustment to the share price (known as ‘bid pricing’). These ‘bid’ and ‘offer’ pricing adjustments aim to ensure the fund’s existing investors don’t suffer the costs of buying or selling properties caused by other investors coming into or leaving the fund. This is explained in more detail here.

Will I pay tax on my investment?

TM home investor fund is a UK domiciled Open Ended Investment Company (OEIC) which is authorised by the Financial Conduct Authority. It also has Property Authorised Investment Fund (PAIF) tax status, meaning that the fund’s income from property investment is exempt from corporation tax, which would normally be payable by an OEIC at 20%.

If you invest through an ISA, you won’t pay tax on any income or capital gains from the fund.

Investors not in an ISA, may be liable to income tax or capital gains tax. you can contact us for a copy of the prospectus which contains more detailed information on taxation within the fund and taxation in the hands of the investor.

Taxation information is based on Hearthstone’s understanding of legislation in force as at July 2018. Legislation may change, and tax and trust law may be open to differing interpretation. The impact of taxation will depend on individual circumstances. Potential investors should seek advice from their financial adviser or tax specialist before investing.

How has the fund performed?

A number of external sites including Morningstar, Trustnet and Financial Times publish prices and performance daily*.

Different share classes have different charges and will perform differently as a result. Not all classes are available to direct retail investors.

Share class X, which is available through the WealthKernel portal, was not launched until 13th July 2018, so has limited past performance information – although it does invest in the same underlying portfolio of properties as the other share classes.

For more information on charges, see the FAQ ‘What does it cost’

*Please note that the fund was originally named the ‘TM Hearthstone UK Residential Property Fund’ but changed to ‘TM home investor fund’ on 13th July 2018. Some past performance information or data on other websites may still refer to the fund by its previous name.

It’s important to remember that returns are not guaranteed, and that past performance should not be used as a reliable guide to future performance.

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