Goldman Sachs has launched the first structured product based on the UK Investment Property Databank (IPD).The tracker, which will be quoted on the London Stock Exchange, is linked to the all-property index of the IPD. It expires in March 2011 and carries a 2.8% management charge - comparable, Goldman Sachs said, to the cost of buying and selling a conventional property unit trust over the same period.
The property derivatives market has seen growing activity during the past 12 months, but Goldman Sachs' product is the first listed tracker.
A survey carried out last year by the London-based Property Derivatives Interest Group found high demand for property derivatives among institutional investors, which is the main target for Goldman Sachs' new tracker. But it also found that most investors would prefer more specific underlyings to the all-property index, to allow tactical reallocation.
Derivatives are considered preferable to direct investment because of the expense of stamp duty and other transaction costs of investing in property directly. They also provide the ability to structure exposures more accurately.
Topics: Goldman Sachs
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