Standard Life re-opens property fund as sector 'returns to normality'

This fund was the first to suspend trading in the immediate aftermath of the EU referendum, and now follows Henderson and Threadneedle in announcing the doors are going to open once again.

Several firms, including Standard Life and Aviva, suspended trading in their property funds following a "rapid increase in redemption requests" as a result of the Brexit vote.

Retail investors withdrew £3.5 billion from UK investment funds in June, compared to the £561 million withdrawn in the worst month during the financial crisis, according to Investment Association research.

In response, the FCA reminded fund managers that they "have a duty to act in the best interests of all investors... therefore they must consider how to ensure the on-going fair treatment of all investors in their funds in the context of the current market conditions".
 
Laith Khalaf, Senior Analyst at Hargreaves Lansdown, commented: "The UK property fund sector appears to be returning to some semblance of normality, though there are still some big funds out there that are yet to open their gates. 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.
 
"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."