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How to keep property fund clients calm

How to keep property fund clients calm

Advisers have said their clients should keep calm and carry on rather than panic about their commercial property holdings.

Analysts have predicted other property funds will also stop dealing.

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Paul Holiday, director of Norwich-based GreenSky Wealth, said: “Others will follow suit now I would have thought but I don’t think there is any reason to panic.

“We had a discussion about it this morning and we don’t invest in those funds but if you are considering any income you might need you need to think about your asset allocation because you would be withdrawing funds from other holdings.

“But the yield will stay, nothing will change. It is just driven by sentiment and feelings about what will happen.”

M&G, Aberdeen, Kames and Legal & General have all made “fair value adjustments” to their Property funds, thereby reducing the value of their portfolios, since the referendum on 23 June.

All portfolios currently remain open for trading.

Martin Bamford, managing director of Surrey-based Informed Choice Independent Financial Planners, said: “We have some clients with assets in that Standard Life fund but not more than £8m in total; our main exposure is to L&G UK Property.

“We are telling clients not to do anything. We limit our exposure to property funds because of their liquidity. Our maximum exposure is 8 per cent and our clients are in it for the long-term.

“The main reason we use property is for diversification and it does help with risk reduction. If you are going in short-term to chase the yield you deserve to get your fingers burnt.”

Kevin Morgan, managing director of Hertfordshire-based Consilium Financial Planning, said: “Property has been seen as a fail-safe and of course it is not because there are comparatively low levels of liquidity.

“I have been talking to fund managers about liquidity levels for some time but you have to have an appropriate balance because if there is too much it becomes a cash fund, not a property fund.

“This will level itself out eventually. Now is the time for considered measures and not knee-jerk reactions, and that is what we should be telling our clients.”

Meanwhile some advisers could be forgiven for feeling smug.

Radostina Dencheva, investment analyst at Norfolk-based Chadwicks, said she recommended her clients reduce their commercial property exposure in January.

She said: “Our view of the market was that commercial property was overpriced. We don’t think it is completely negligible but we reduced it to a small amount so we are not worried.