Property Funds: Liquidity Remains an Issue

Not for the first time, investors are discovering the illiquidity mismatch risk of open-end property funds investment structure

Simon Molica 10 October, 2016 | 10:10AM

The Threadneedle Property fund resumed trading at midday on September 26. A number of the other large funds have also announced their intention to re-open in October, including Standard Life and Henderson. These are positive signs indeed and while the outlook for the asset class remains clouded, we are witnessing a return to normality as fair-value adjustments are reduced.

With general scepticism surrounding the future potential return for the asset class post-Brexit combined with an opportunity to trade out of these assets, we investigate what this might mean for investors. We assess the situation for those that already hold UK property funds as well as for those who might want to consider these products going forward. In doing so, we consider two key issues: does the asset class offer good value and is the structure appropriate for use by investors.

Property Fell Post Brexit

Property markets are one of the most broadly discussed topics in the investing public and with most people owning their own home it only increases the public’s interest in the topic. Broadly, there are only a few viable methods to invest in property, including directly – typically residential houses, through real estate investment trusts (REIT’s) or open-ended investment vehicles, managed funds with daily liquidity.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
British Land Co PLC551.20 GBP0.00
Land Securities Group PLC945.20 GBP0.00
Threadneedle Property289.60 GBP0.00

About Author

Simon Molica

Simon Molica  is a portfolio manager for Morningstar Investment Management

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