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The Euro PIN Fund – Invest in Property Firms and Gain Euro Exposure

Peter Hemple hopes to replicate the success of the PIN Fund across the Eurozone

Over the past 10 years, the British Pound peaked against the Euro at 1.44 back in July 2015. However, since the EU referendum the Pound has not been worth more than €1.20 and when it hits that level it usually bounces back down into the 1.10-1.15 range, with the weakest value (so far) being€1.06.

At the end of June, the Pound fell to €1.09, which was a three-month low against the Euro, amidst a combination of growing anxiety that the UK and EU will fail to reach a comprehensive free-trade agreement by the year-end and signs that the Eurozone's economic recovery from the pandemic is outpacing that of the UK.

Markets appear to be increasingly interested in the speed with which economies emerge from the coronavirus crisis, rewarding the currencies of countries and regions where economic growth is outperforming, with the UK lagging behind most of Europe in June. There have also been several reports that Boris Johnson is preparing for the possibility of a “hard Brexit”, which many analysts believe will result in the Pound-Euro exchange rate falling to parity.

The OECD forecast in July that the UK will suffer the worst recession in the developed world this year, with its GDP shrinking by 11.5%, which was only slightly worse than its forecast for France, Italy and Spain, but much worse than its forecast for Germany at -6.6%. The Bank of England has also left the prospect of a negative interest rate on the table. Although this is unlikely to be an imminent policy response the chance of such an outcome would likely increase if a trade deal is not be agreed with the EU later this year.

For all of the above reasons, now could be an opportune time to diversify some of your funds out of Pounds and into Euros. However, while we have often advised expanding your portfolio of rental properties across Europe, with several restrictions on travel still in place and with governments all over the world changing their tax/investment laws on an almost daily basis, buying actual real estate in Europe in 2020 is far more of an obstacle than simply buying shares in property-related companies that are based in countries that use the Euro. But which countries should we consider investing in?

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