According to a Financial News headline this morning, investors are withdrawing large amounts from UK property funds, influenced no doubt to the wave of articles from journalists about how the property market has peaked and is about to crash.
Apart from the obvious comment about the herd like mentality of investors, I would like to reflect on the appropriate asset allocation for an individual investor. To my way of thinking the starting point, or rule of thumb for an individual investor should be one third equities; one third cash or fixed interest and one third property, not counting the house that you live in. You don't count the house for the same reason you don't count the car you drive or the clothes you wear, because they are primarily working assets, not investments.
If this rule of thumb is right, UK investors remain woefully underinvested in property both directly and indirectly, with the average institution only 4% in property and many smaller funds having no investment in the sector at all.
My conclusion is that we remain hypnotised by the cult of Equity.