Your client’s own home would not normally be considered to be part of their investable assets, and will usually have been purchased for reasons of lifestyle – not as an investment. The fund provides the opportunity to gain exposure to a broad range of professionally managed private rented sector properties, adding another asset class to their investment, ISA or pension portfolios. Total returns from private rented residential property have historically demonstrated low volatility and little correlation with other mainstream asset classes such as equities, fixed income and commercial property and can, therefore, add further diversification to a portfolio. Due to its scale, the fund is also able to spread the risk of property investment rather than being concentrated in one or two properties in a single area in the same way a typical buy-to-let investor may be.  TM home investor fund invests in flats and houses of various sizes across England, Scotland and Wales to broadly reflect the UK (excluding Northern Ireland) housing market in terms of regional distribution and property type. Hearthstone favours new or modern properties to keep maintenance and management costs as low as possible, and chooses homes that will attract long-term tenants in strong performing rental locations with an active re-sale market to maximise investor returns.  The fund can also be used to meet specific objectives, such as inheritance tax planning where a client wants to gift amounts to a child or grandchild with the aim of helping them on to the property ladder.

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.

Compared with traditional buy-to-let investing, the fund compares favourably for the following reasons: Lower risk: The fund offers greater diversification than buy-to-let, spreading the risk of property ownership across a large number of tenants, property types and locations, rather than it being concentrated in one or two properties in a single area. Buying power: As a large investor, the fund is also able to acquire assets through bulk-purchases from developers at discounts to open market value, providing additional return to investors. Value for money: The fund costs include all property management and maintenance as well as tenant liaison, making it hassle-free for investors, compared to a direct buy-to-let investment. Tax efficiency*: Unlike direct buy-to-let, the fund can be held in ISAs and SIPPs. Outside of these tax-advantaged wrappers, capital gains are not subject to the 8% Capital Gains Tax Surcharge which apply to buy-to-let properties. Buy-to-let investors also have to sell an entire property – perhaps worth hundreds of thousands of pounds – in order to realise any capital gain, whereas an investor in the fund could choose to cash in just some of their shares to keep within annual Capital Gains Tax allowances each year. *Taxation information is based on Hearthstone’s understanding of legislation in force as at October 2019. 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.

Residential property investment is very different to commercial property investment and needs different expertise and experience in order to gain the best returns. In general, residential property provides: Diversification – low correlation to other mainstream asset classes, including commercial property. Improved liquidity – whilst liquidity risk will exist for any property fund, it is generally easier to sell a house than a large commercial property as the residential market is larger and more active and with lower unit sizes. Historically greater resilience of rental income during market downturns

Properties, like most other things, can go up or down in value. The value of your investment is very much dependent on the value of properties in the fund, so that can go up or down in value too. Property values, although provided by professional, independent Chartered Surveyors are a matter of opinion, so the price actually achieved when a property is sold could be higher or lower than its most recent valuation. Property can also take time to sell and, although the fund does usually hold enough cash to enable investors to withdraw their money, delays may occur if properties need to be sold. You should always read the Key Investor Information Document or the prospectus, and the latest fund factsheet, before investing. UK residential property does have a long history of providing investment returns which are less volatile than the stock market or commercial property. It also tends to react differently to changes in the economic environment than other asset classes (in other words, its returns have little correlation with equities, fixed income and commercial property). If you already invest in those asset classes, an investment in the TM home investor fund can give your overall portfolio further diversification and potentially reduce the risk of your overall portfolio.