A new capital protected fund tied to the United States housing market is set to be launched by Australian investment manager JB Global.
JB Global chief executive Justin Beeton said that without the risks associated with direct investment, JB Global US Real Estate Investment offers investors exposure to a sector that was at the epicentre of the global financial crisis.
Its discharge follows JB Global’s launch of the Berkshire Hathaway Income & Equity Accelerator, which in March, raised $58 million.
"US property is the next place Australian investors should look for growth," he said.
"The old adage of investing when there’s blood in the streets is definitely true of US property. US property prices are still priced at a 60 per cent discount to 2007 levels."
While the economy seems to have bottomed and property prices seem to have stabilized, market sentiment in the US is a lot higher than it was six to 12 months ago, said Beeton.
"I can see a return to equilibrium between US property buyers and sellers, which to me indicates a recovery in property prices is likely," he said.
The fund invests in the Dow Jones US Real Estate Index, which is 60 percent below its 2007 highs.
The product is intended to protect investors from being turned down in the US property values and currency by means of combining capital protection and risk management mechanisms.
Investors must borrow 100 per cent of the investment amount and disburse interest straight at 3.4 percent. The loan given by the Royal Bank of Scotland, is non-recourse, this means that it does not have to be paid back if the lender collapses.
Beeton said "This makes the investment suitable for SMSFs (self-managed superannuation funds), which are only allowed by law to invest in non-recourse leveraged products."
Contingent coupons of up to 8.1 percent are billed based on performance and redemptions in the fund are available quarterly.