iShares UK Property UCITS ETF GBP DIST (LSE: IUKP)

iShares UK Property UCITS ETF GBP DIST (LSE: IUKP) 

The one I’ve been looking at is iShares UK Property UCITS ETF GBP DIST (LSE: IUKP). This ETF aims to provide diversified exposure to UK real estate by tracking the FTSE EPRA/Nareit UK Index. The index is designed to track the performance of real estate companies and real estate investment trusts (REITs) listed on the London Stock Exchange

It’s a decent size, with over £600m in assets, has a relatively low ongoing charge, and has been going since 2007. No wonder it’s one of the most popular ETFs for UK investors.

The fund is also well-diversified, holding the 40 companies listed in the index. These operate in a wide variety of sectors including industrial, residential, and healthcare. 

Out of the 40 firms, the largest holding is Segro at just over 20%. This specialises in out-of-town business space and is one of the biggest industrial property companies in Europe. Well-known names such as Land Securities Group and British Land are also in the fund, as is the largest UK operator of purpose-built student housing, The Unite Group

The current dividend is 1.96% and perhaps this is the biggest drawback of the fund. UK residential buy-to-let returns currently sit much higher in the region of 5%. Additionally, over 10 years, the average house price has increased by over 40% whereas this ETF has increased by around 10%. Over this period, by my calculations, an investment into bricks and mortar would have been more profitable.

There are 40 companies in the fund from a wide variety of property areas. Not only does this offer me more diversification than a buy-to-let, but some of these sectors have very high barrier to entry costs, which can be difficult to overcome as an individual investor. Finally, since I can buy and sell this ETF like a share, it provides access to UK property investment in a liquid way.

A good protect to buy and check monthly.


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