This is the sixth article in Shaun Latter's 15 part series on the fundamentals of investing.  Also read the other articles in this series:

• You are your biggest risk
• Saving yourself poor
• How risky are stocks?
• Diversified to death
• Shares + time = wealth

With all the talk (and corresponding performance) of the stock market and its crashes, crunches and crisis it’s little surprise that investors have sought out a new avenue to generate their returns. Ladies and gentlemen; I present to you the darling of "equity alternative" returns – property!

As convincing the returns of late have been so too is the misunderstanding of the general public regarding the participation of this.

Too many make the mistake of "lumping" any and all types of property into the same crude ball expecting stellar performance. The plethora of property options being shoved under investor’s noses includes fractional ownership (on anything from resorts and game farms to executive apartments), property syndication, timeshare (believe it or not) and let’s not forget good old residential property.

Don’t get me wrong; many people have, and may even continue to make, very handsome returns on these investments, but if we are looking for exposure to a growth asset as an alternative to equities, and are expecting some reliability on the returns, the prize has got to go to listed commercial property.

One of the main reasons listed commercial properties has so much going for it is because it generally has contractual leases of three years or more with developed businesses with solid balance sheets. This means that the biggest risk (tenant default) is effectively mitigated and rental income (main driver of yields) is adequately secured.

This asset class, although expected to deliver returns of about two percent lower than equities over the long term, has shown its mettle of late and has a very deserving place as part of a well diversified portfolio.

Property generates returns from two sources; rental income and capital growth. We are in a developing economy where economic growth is expected and as it expands so too does business activity increase triggering the need for space. As the rental increases (whether purely by inflationary pressures or an increased demand for prime space) so too will the capital value of the property increase.

Using equities and property as growth assets in your portfolio is an efficient way of generating sound returns from the market regardless… no wait, because of the current economic cycle. If we understand that markets are forward looking and future priced, then it stands to reason that share prices increase before the economy improves (almost in anticipation of). This is different to property where rental income streams and capital appreciation are dependent on a thriving economic environment to benefit. As the economy ebbs and flows through the inevitable business cycles, one can allow their exposure to property to take over from where equities left off and continue to deliver sound inflation beating returns.

Article continues on page two: the most popular ways of accessing listed property as an investment...