In September, outflows from open-ended property funds
returned to similar levels seen in January as a small number of funds reopened
– but they are not expected to now soar to the record levels seen in March.
to global funds network Calastone, redemptions from property funds in September
totalled £83m, compared with just £9m in August and £14m in July, when most
funds were closed.
In January, outflows stood at £83m but rose to £118m in March.
Most funds were then gated after valuers invoked a material uncertainty clause
amid concerns they were unable to accurately value portfolios.
While experts say many funds could remain gated until 2021, some
have reopened. At the start of September, St James’s Place reopened its three
UK commercial property funds and on 17 September, Columbia Threadneedle ended
the suspension of its Threadneedle UK Property Authorised Investment Fund and
its feeder fund, the UK Property Authorised Trust.
Redemptions were not likely to return to the record levels seen
in March, independent consultant John Forbes told Property Week.
”Investors are calming down a bit as the message is getting
through that the Financial Conduct Authority [FCA] is not going to do anything
instant, so I think more are waiting to see what eventually transpires by way
of regulatory change,” he said.
In August, the FCA launched a consultation to address “the
potential harm caused by a mismatch in liquidity in certain UK authorised funds
that invest directly in property, for example offices, shops and warehouses”.
The FCA proposed that investors give notice of up to 180 days
before redeeming their investment.
Experts criticised the one-size-fits-all approach, pointing out
that investors would not know the price at which they could redeem their
investment until the end of the notice period, leaving them vulnerable to a
fall in value during that time.
The consultation ends in November and the FCA will publish
guidance next year.