Understanding Capital Growth Funds

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Understanding Capital Growth Funds
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Funds tied to capital such as land - and not the
stock market - are more affected by specific
local conditions and benefit from location
diversification. A capitals growth fund is any
portfolio of investments that is assembled with
the intent to generate an investment return.
Typically, those returns are reinvested. Of
course, achieving capitals growth - to sell at a
price that is higher than the price paid on the
investment - is a goal, not a guarantee. But the
chances of success are much enhanced by working
with professional capital growth professionals
who truly know the assets that are being invested
in. The collection of investments within the fund
and the market conditions that affect them
determine whether a capital growth fund lives up
to its name.
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Capital growth funds based in real estate are
different from, say, those tied to the stock
market. Fund managers look at the distinct and
unique combinations of land tracts to maximise
certain factors, including local market
conditions that would increase or decrease the
value of each particular piece of property.
Typically, those returns are reinvested. A
balanced capital growth fund in real estate would
also be diverse across many geographical
jurisdictions such as counties, as a local
political structure can influence how land is
used and zoned.
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Also, diversification in the likely end use of
the land (residential versus commercial, for
example) can help the capital growth funds
investor hedge against disruptions in any
particular sector. The expertise of capitals
growth fund managers in land acquisition and land
planning is therefore essential for developing
valuable real estate-based capital growth funds.
Experienced fund managers focus on the most
profitable part of the land development process
acquiring sites that have been identified to come
forward for residential or mixed-use development
but do not yet have detailed plans or
permissions. Lucent then works with its own
in-house team of specialists augmented by a
select group of advisors to produce sustainable
"development-ready" land sites before selling to
house builders or other development companies.
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