It has been another interesting week for property funds, with the commercial market coming under further scrutiny after Nationwide indicated that residential house prices fell at their fastest rate for 12 years.
As we noted in last week's Fund Times, M&G decided to place a 90-day notice period on the redemption of units within their offshore property fund. This week it has been Schroders who hit the headlines after wiping 12.5% off the value of units in their £2bn institutional pro
perty fund. This comes off the back of consultant CB Richard Ellis predicting annual returns for property to be down to almost zero by the end of the year – a sharp retrace following 2007's 18% gain. Two of the biggest group's investing in direct commercial property, Norwich Union and New Star, have commented that they are not planning to impose 90-day notice periods on redemptions. However both groups continue to price their property funds on a bid basis, amid growing fears of a downturn within the sector.
HSBC Launches Multimanager Global Property Fund
On 26 November, HSBC launched HSBC Open Global Property, the first fund-of-property funds that will be available to UK investors. The fund was launched on 26th November and is managed by Guy Morrell. It will invest in both direct property funds and property securities.
Neptune Fund Launches
Neptune Investment Management are set to bring two new funds to the UK market on Monday 3rd December. They plan to launch a Latin America fund to be managed by current head of US Equities and manager of Neptune US Opportunities Felix Wintle. Also on Monday Neptune will launch an Asia Pacific Opportunities fund, to be managed by Shelley Kuhn who is the current Neptune India manager and the assistant manager of the Neptune China fund. Both new funds will be run in line with Neptune’s high conviction approach, focused around a concentrated portfolio of between 40-50 stocks.
FSA Issue Multi-manager Research
According to the FSA many small IFAs do not have sufficient understanding of multi-manager funds. The FSAs findings come after visits to 10 firms, where they posed three questions related to multi-manager funds. According to the FSA it was evident that firms had made insufficient comparison with the alternatives that were available. Some firms were unaware of the full level of charges carried out, and overall the FSA noted that there was not enough appreciation of the effects that total charges of multi-manager offerings could have on the ultimate investment performance. As a result of their findings, the FSA plan to carry out further work in this area going forward.