Asset managers ‘monitoring situation’ as property fund fears grow

Added 5th July 2016

Asset managers with large UK property funds are weighing up their responses to a spike in redemptions.

Asset managers ‘monitoring situation’ as property fund fears grow

Standard Life Investments sparked fresh fears over the prospects for the asset class by gating its UK property fund yesterday.

Spokespeople for M&G Investments, which has the largest UK property fund in the industry at £4.58bn, Henderson Global Investors and Columbia Threadneedle said their firms are ‘monitoring the situation.’

M&G already announced that it has applied a fair value adjustment (FVA) equivalent to a 4.5% reduction of the net asset value to the M&G Property Portfolio on 1 July.

A spokesperson for Legal & General Investment Management confirmed its property fund has not halted redemptions.

“Legal and General's UK Property Fund remains well positioned in terms of liquidity and asset management initiatives,” she said. “The fund retains over 20% of its NAV in liquid assets – the majority of which is held in cash. In addition to this, the fund has a pipeline of sales initiatives which will increase its cash position if needed and has a well-diversified investor base. The UK Property fund is managed by a very experienced team and continues to receive strong support from rating agencies and advisers alike.” 

Fears over the prospects for the UK property sector and economy generally meanwhile saw the FTSE 100 dip into negative territory on Tuesday before a rapid bounce back.

The rebound was inspired by Bank of England governor Mark Carney’s latest public appearance in which he indicated there will be £150bn of new lending to support the British economy. 

The money will be available to lend to individuals and businesses due to a proposed relaxing of minimum capital requirements.  

As of late morning Tuesday, the FTSE 100 was up 31 points to 6554 having been as low as 6472 earlier. The FTSE 250 did not do so well, remaining 380 points down for the day at 15,735, but stabilised after Carney's comments.

A somewhat similar picture emerged for sterling which once again fell on the negative sentiment to $1.31 before starting to recover.

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Alex Sebastian

News editor

Alex joined Portfolio Adviser in April 2014 and has been a financial journalist since 2008. He has previously held editorial positions at the Financial Times Group and Euromoney Institutional Investor. Alex is NCTJ qualified and has a degree in economics from the University of Sussex.



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