The £158m portfolio, which has the best risk-adjusted return record of any fund across the entire IMA unit trust and OEIC universe over five and 10 years, is currently an unregulated collective investment scheme (UCIS), which means that it is out of reach of most industry professionals.
However, following approval from the FSA and HMRC, it will once again be made available, subject to investor consent.
The conversion should be completed before the end of January 2013.
The Freehold Income Trust attempts to provide a secure and stable return primarily through acquiring freehold ground rents which offer both an income stream and capital growth prospects.
It currently has a target yield of 4.25 per cent after charges, but the yield is slightly higher than this at present.
The portfolio has an unbroken track record of positive returns over 19 calendar years and has consistently outperformed cash, gilts and inflation over these periods. The trust has returned 88.43 per cent over the last decade, with an annualised volatility marginally higher than cash.
With a Sharpe ratio of 1.6, no open-ended fund comes close to matching it on a risk-adjusted return basis.
Performance of fund vs indices over 10-yrs
Source: FE Analytics
The news has been welcomed by Neil Shillito (pictured), direct of SG Wealth Management, who was forced to drop the fund when the FSA expressed its concern surrounding UCIS products earlier this year.
"We shall definitely be using the fund again following this announcement," he said.
Speaking to FE Trustnet back in April, Shillito lauded the portfolio: "I’d recommend this fund to just about anybody as a risk diversifier. [The trust] owns many tens of thousands of properties across the UK, which it collects regular ground rents from."
"These rents are very modest – perhaps just £150 – but the income is very regular and predictable. Even if there are a few defaults here and there, this doesn’t make any difference to the overall return."
Nigel Ashfield, manager of the Freehold Income Trust, has already seen a great deal of demand from advisers who want access to the fund, but says he is keen to keep inflows slow and steady.
"We have a stack of people like Neil [Shillito] waiting to invest, but we’re always a little nervous about promoting the fund too much," he explained.
"As well as consistently generating positive returns, we’ve been very good at growing our assets steadily – the last thing we want is a load of money flowing in."
"This move is reacting from feedback from the IFA community, who clearly weren’t comfortable with the UCIS structure."
Ashfield highlights the significant benefits of gaining PAIF status, which he believes will hold the trust in good stead in a post-RDR environment.
"It’s significantly more tax efficient, as it removes the requirement to pay tax on capital gains in the fund," he explained.
"The fee structure no longer includes the trail commission, so you’ll see the AMC [annual management charge] and TER [total expense ratio] come down."
"Corporate governance has also improved and everything on the regulation side is up-to-date, ready for RDR."
"Platforms weren’t as affected by the issues surrounding the PAIF, but this makes things a lot clearer," he added.
The Freehold Income Trust is available with a minimum investment of £5,000 and has a TER of 1.9 per cent.