The manager of the £20m Psigma Dynamic Multi Asset fund says this is because any potential returns from the sector would be negative in real terms due to the high fees charged by bricks and mortar funds.Much has been made about the poor outlook facing the fixed income market, as yields remain historically low and prices unattractively high.
In order to mitigate this risk – and locate income – the likes of Bill McQuaker and the Jupiter Merlin team have turned their attention back to UK commercial property.
However, Becket says that now is not the time to be adding to the sector as the risks surrounding it far outweigh the potential rewards.
"The last time we had a significant holding in UK commercial property was in March 2008 and the only time we went back was in May 2009, but we only held that exposure for around 18 months or so."
"We upped our exposure to the sector because there had been a three-month period where both developed and emerging market equities, plus the credit market, had performed very well," he said.
"We saw that property was an area of the market that had been left behind and therefore we thought it was a good opportunity to capture some quick returns without being impeded by the punitive charges bricks and mortar funds have."
"That is the problem now," he said.
"Not only is it an illiquid market, but the yield these funds are distributing after charges are around 2.5 per cent or at absolute most, 3 per cent."
"When you juxtapose that with the high likelihood of no capital appreciation, it isn’t a very attractive proposition."
"Therefore, if we were to invest in bricks and mortar funds in our portfolio, we would be looking at a potential negative real rate of return compared with the RPI [retail prices index]."
Becket says another reason why he does not hold property funds is because there is a lack of options available.
"Another problem we have with UK commercial property is its accessibility," he continued.
"Yes, there are a range of options available but none of which suit our needs at this point in time."
"We feel that it is an asset class that you can only hold if you are absolutely certain it is going to make money in real terms."
Becket has managed the Psigma Dynamic Multi Asset fund since its launch in September 2008.
FE Analytics data shows the fund has returned 43.83 per cent over this time while the IMA Mixed Investment 40%-85% Shares sector has returned 38.5 per cent.
Performance of fund vs sector since Sep 2008
Source: FE Analytics
The fund has been considerably less volatile than the sector average over this time; it has, however, underperformed its peers over one and three years.
Although the portfolio has an equity bias, fixed income still makes up a large proportion of AUM.
Becket currently holds 8.51 per cent in corporate bonds, 7.82 per cent in index-linked bonds and 3.95 per cent in investment grade debt.
He counts the likes of AXA IM US Short Duration High Yield Bond and M&G UK Inflation Corporate Bond as top-10 holdings.
Becket admits there is more to the property sector than the UK commercial bricks and mortar funds, but he still feels that it is an area of the market that is best left alone for now.
Even high-flying property equity funds, which sit on top of the IMA Property sector performance tables, cannot tempt the manager.
"We have looked at other areas of the commercial property market, such as Germany and Japan, where opportunities are better plus the leases give you a good degree of inflation proofing, which will become increasingly important over the next decade."
"However, it is difficult to find the funds that can give you access to those markets."
"Of course, there are property equities and we did look at a First Sate fund which focused on them, but there has been a significant yield compression recently which means it isn’t looking very attractive."
"Nevertheless, if we want equity exposure we wouldn’t want property shares, we would want to hold more cyclical stocks than can help the fund keep up in a rising market," he added.
Psigma Dynamic Multi Asset requires a minimum investment of £10,000 and has ongoing charges of 2.45 per cent.