Withdrawals from property funds fell sharply following the
Conservative Party’s decisive victory in the general election last month.
In the six days before the election, investors pulled out just under £226m from UK property funds, compared with outflows of £64m in the six days following the vote, according to data from global funds transaction network Calastone.
Property funds saw net inflows on 23 December, when £143,000 was
invested, followed by just under £1m on 27 December and £769,000 on 30
December. This represents the first time property funds have seen net inflows
since September 2018.
The improvement in fund flows will ease pressure on property
funds, which suffered their worst year on record in 2019 with £2.2bn withdrawn
– equivalent to more than £1 for every £15 invested.
Withdrawals spiked in the wake of M&G’s decision to suspend
trading in the M&G Property Portfolio fund. Net outflows hit £60m
on 5 December, the day after the gating of M&G’s property fund,
raising fears that a wave of redemptions would force other funds to suspend
trading.
“Outflows finally tailed off in the last days of 2019,” said
Edward Glyn, head of global markets at Calastone. “With less immediate
redemption pressure, fund managers will use the breathing space to ensure their
portfolios can weather any further disruption.”
The Conservative victory also acted as a fillip to funds in
other asset classes. Inflows into equity funds surged from £20m on the day of
the election to £153m the day after and £181m the following Monday.
December accounted for two thirds of the total net inflows into
equity funds in 2019.