Property investments have a positive effect on the development of an investment portfolio by improving the ratio of risk to return. Over time, a mixed portfolio including stocks, bonds and real estate will produce higher returns for the same risk than a portfolio comprising only stocks and bonds.
The LA FONCIÈRE fund invests primarily in residential properties located mainly in Lausanne, Geneva and the rest of the French-speaking part of Switzerland. The fund is currently valued at 1.2 billion CHF and has shown consistently strong results over the years.
“The fund was founded in Switzerland in 1954 by businessman Alfred Borter, who recognized that, by pooling small investors’ money and investing it in property, he could generate the kind of returns that could previously only be enjoyed by the very rich,” says Director General Arnaud de Jamblinne. “Today, the fund is traded on the Swiss stock exchange, and we are responsible for its management. We have administration units for each of the properties in our portfolio. We supervise these units and develop the investment strategy. An important part of this strategy is renovating and maintaining our properties to a high standard.”
The company also applies stringent criteria to the selection of new property investments. These must offer a high standard of living, be simple to maintain and offer potential for added value. The quality of the property portfolio ensures that rental income amounts to 75 million CHF each year. This money, minus the fund’s operating costs, is shared out in the form of dividends between the individual investors. Rents are set by the company and reflect the quality and location of the property, and the rental potential is valued higher than the appreciation of the asset when considering a new investment.
“In recent years, we have only disposed of a handful of our assets,” says Mr. de Jamblinne. “It is becoming more difficult to find attractive and profitable investment properties, so our focus has been on optimizing our existing stock.”
Although the fund was initially conceived as an investment vehicle for small investors, LA FONCIÈRE now has a lot of institutional investors. Their interest is a reflection of how a strongly performing property fund can be used to round out a diversified investment portfolio and help improve its risk profile. LA FONCIÈRE is extremely successful and has been named best property fund in two of the last four years.