Columbia Threadneedle Investments has temporarily suspended trading in its UK property fund amid client redemptions. The move means more than half the property fund sector is now suspended.
The asset manager suspended dealing on the £1.4bn Threadneedle UK Property Authorised Investment Fund and its feeder fund from today.
Columbia Threadneedle says it has “not been immune” to the retail outflows in the sector, with it meeting requests for redemptions from its cash balance.
A statement says: “However, it is expected that these requests to sell will continue for the time being due to uncertainty in the market following the UK Referendum result, therefore the temporary suspension of dealings allows sufficient time for the orderly sale of assets, and protects the interests of all investors.”
The asset manager adds that property should be “part of a balanced portfolio for a long-term investor”.
The firm adds that it went into the EU referendum with a “high level of liquidity” in the funds.
The company states: “We have an obligation to keep liquidity in our daily priced funds and wanted to keep it open to allow investors to buy and sell their shares. However, we have now reached a point where we need to take action to protect the investors remaining in the funds.”
It takes the total assets in suspended property funds to £14.3bn, following the closure of funds at Standard Life Investments, M&G, Aviva Investors and Henderson. This marks more than half the £25bn IA property sector.
M&G Investments temporarily suspended trading in the £4.4bn M&G Property Portfolio and its feeder fund, while SLI stopped trading on its £2.7bn UK Real Estate fund in response to redemption requests, and Aviva Investors suspending trading on its £1.9bn Property Trust. Most recently Henderson suspended dealing on the £3.9bn UK Property PAIF and the feeder fund.
Laith Khalaf, senior analyst at Hargreaves Lansdown, says: “These funds are therefore likely to be closed for weeks and months rather than simply a matter of days. Clearly there has been a knee-jerk reaction to Brexit in the commercial property sector, which may moderate over time.
“Investors in commercial property funds should not make decisions in a panic. Granted the Brexit vote may have the potential to negatively affect the commercial property market in the short run, but long-term investors should be willing to ride out periods of weakness, particularly when there has been such a sharp decline in fund prices without much evidence of a slowdown in the underlying property market.”
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