Retail Open-ended Property Funds Avoid Liquidity Restraints

While 2016 and 2020 saw widespread suspensions and closures of IA UK Direct Property funds, the recent measures imposed by institutional property funds appear not to be spreading to the retail sector.

UK property funds impose liquidity limits - reports

abrdn, BlackRock, Canada Life Asset Management, Columbia Threadneedle, Legal and General Investment Management, M&G Investments, Royal London Asset Management and St James's Place all confirmed they had no plans to impose restrictions on their retail open-ended UK property funds.

Head of UK Property at Canada Life AM Michael White detailed his view on the current market outlook: "With finance rates and the cost of debt rising rapidly the commercial investment market is having an extended summer period of inactivity. Transaction volumes have dropped off a cliff, and there was little market evidence for valuers to move valuation yields with any certainty in September.

"On the flip side, the value correction will in time give rise to a buying opportunity, and we have found that occupational markets have remained relatively robust with continued take up of space, mostly notably for prime accommodation, across most of the main commercial and alternative sectors.

"The success of the current fiscal plan to reduce inflation and boost GDP will clearly determine how far commercial capital values will fall."

Aegon Property Income wind up records first quarter with no distribution

The restrictions of the £2.3bn Threadneedle Pensions Pooled Property, £3.5bn BlackRock UK Property and £2.7bn Schroders Capital UK Real Estate funds were all linked to interest rate shifts in Q2, with the most recent market volatility unrelated to the moves.

Rising rates have had a twofold impact on the outflows from these vehicles, with an improved funding ratio reducing the need for high growth assets such as property, and a denominator effect spurred by higher rates on the reverse forcing funds to sell down their property assets as their proportion of net asset value increased.

RECENT NEWS

When The Wave Turns

Why Retirement Investing Is Moving Towards Resilience Jeremy Grantham’s latest market warnings have revived an old tru... Read more

Gyrostat Capital Management: July Retirement Portfolio Resilience Assessment

The Market Is Currently Presenting an Opportunity to Strengthen Retirement Portfolio Resilienc... Read more

The Invisible Risk That Decides Your Retirement

Why how investors behave matters more than what markets do and what disciplined port... Read more

Gyrostat Capital Management: The Missing Allocation In Retirement Portfolio Construction?

For decades, retirement portfolios have largely been constructed using combinations of growth assets a... Read more

When The Gate Comes Down

A Stress Test Rather Than a ScandalApollo Debt Solutions is not a blow-up story. It is something arguably more instructi... Read more

What If The Investment Industry Is Benchmarking The Wrong Things?

  Investment management is built around benchmarking.  Fund managers compare themselves a... Read more