Standard Life Investments is to re-open its UK Real Estate fund next month (17 Oct) as the dust settles on the property sector following the disturbances caused by the Brexit vote.
The fund was the first among the property collectives to suspend trading in the panic that ensued following the unexpected vote for an exit from the EU, which triggered an investor exodus from the sector.
Investors headed for the hills, selling property-focused investment trusts and withdrawing cash from open-ended funds on fears Brexit would crimp economic growth, hitting valuations and tenant demand.
Skittish investors feared many of the commercial sites in which property funds invest would soon be lying empty if companies were to break their leases and withdrawn from the UK.
Given that property is an illiquid asset, fund groups were left with little alternative but to hit the suspend button to protect their asset base and remaining investors.
In re-opening for business, the £2.5 billion Standard Life UK Real Estate (GB00BYPHP536) fund follows decisions by Henderson UK Property Trust (GB00BP46GF57), set to resume trading next month (14 Oct) and the Threadneedle UK Property Trust (GB00BQ1YHW31), which has flung its doors back open today (26 Sep).
|UK PROPERTY FUNDS|
|Correct as at 26th September 2016||Suspended Trading?|
|Aberdeen UK Property||No|
|Aviva Investment Property Trust||Yes|
|F&C UK Property||No|
|Henderson UK Property Trust PAIF||Yes - until Friday 14 October|
|M&G Property Portfolio PAIF||Yes|
|Standard Life UK Real Estate||Yes- until Monday 17 October|
|Legal & General UK Property Trust PAIF||No|
|Threadneedle UK Property Trust PAIF||No- fund re-opens 26 September|
|Source: Hargreaves Lansdown|
With the economic Armageddon promised by the 'Remain' campaign averted thus far, the UK property fund sector is returning to some semblance of normality, though as the table shows, major funds from Aviva and M&G remain suspended.
'The big freeze that beset property funds over the summer could well recur if the sector sees more large withdrawals, so investors should make sure they are willing to accept this ongoing risk, and to hold the funds for the long term,' says Laith Khalaf, senior analyst at Hargreaves Lansdown.
He adds: 'One nagging concern for investors in the sector, beyond the prospect of future trading suspensions, is the high level of cash these funds now hold to provide daily liquidity for shareholders.
'This is a perfectly sensible strategy for a manager running an open-ended fund to operate, but in today’s low interest rate environment it will act as a drag on returns, which is yet another drawback for property fund investors to consider.
'All in all, the score card for open-ended property funds has a few ticks, and a lot of crosses.'