What does the Fund invest in?
The TM home investor fund buys flats and houses of various sizes, which are then rented to families, individuals and companies. The properties are spread across England, Scotland and Wales and broadly reflect the UK (excluding Northern Ireland) housing market in terms of regional distribution and property type but, as an actively managed fund, Hearthstone has flexibility to select only stock that is expected to positively impact the portfolio performance and increase the likelihood of outperforming the fund’s benchmark.
Properties are selected on a long term ‘buy and hold’ strategy, although the fund has the flexibility to divest under-performing parts of the portfolio, as well as scaling up others. 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.
It aims to hold at least 85% of the portfolio in residential property, with the remaining 10% to 15% in cash and cash liquidity funds in order to meet day to day redemption requests. All properties are bought outright with cash, so there’s no debt to service and no risk of breaching lending covenants.
The fund may temporarily deviate from the above allocations should investment circumstances dictate. PAIF investment and borrowing restrictions also apply and are outlined in the prospectus which can be downloaded from the library.