Weekly Thoughts 06 May 2015

I had a property developer in my office last week. Just a social chat. He asked me about asset manager returns. The line of thought came from him telling me that 95% of his assets were in fixed property, rented out to a variety of tenants, both residential and commercial and all in one city. And he has a lot of property. He said that all this cost quite a bit of money and time to manage and run, including his office staff, before he realized a net yield – his income. He was considering his risks. I commented that his investment portfolio was actually more risky than he thinks. One asset class, you cannot move it, you have to find a buyer to liquidate and get out, you have to manage difficult tenants and non-payments…. I suggested he vary where his wealth was held.