Canada Life has reopened its property fund with immediate effect following the portfolio’s latest valuation.
The firm said this morning (October 8) it had removed the 185-day notice period for trades, which effectively means the fund has been reopened as of today.
Canada Life’s property fund is an authorised contractual scheme, rather than an open-ended fund, so is not subject to the same regulations as most property portfolios.
However, it introduced an 185-day redemption period in March following advice from its independent valuers that it was not possible to provide accurate and reliable valuations for all properties held in the fund.
It mirrored the rest of the market, as all the ‘bricks and mortar’ UK property funds available to retail investors, with about £13bn of assets between them, were suspended in the third week of March at the start of the coronavirus crisis.
As a result of the today's announcement, Canada Life’s pension and life funds invested in the property ACS have also removed their deferral periods and can be traded.
Slow wave of reopening
Property funds began to reopen their doors a month ago (September 9) when the Royal Institution of Chartered Surveyors recommended a general ‘lifting’ of material valuation uncertainty from areas of UK real estate.
Material uncertainty means valuers were unable to value the assets within the funds with the same degree of certainty as would otherwise be the case.
Rics' announcement essentially allowed property funds to reopen if the asset manager saw fit.
But most managers did not immediately respond. St James’s Place bucked the trend and opened its fund on the first day, while Columbia Threadneedle’s equivalent portfolio was available from September 17.
LGIM is to re-open its fund from next week (October 13).
How it works
Rules announced by the Financial Conduct Authority last year require property funds to automatically suspend when their valuers find material uncertainty over the pricing of 20 per cent or more of their assets.
Portfolios were gated because the coronavirus crisis had caused material uncertainty in the market.
Meanwhile, the FCA is consulting on rules which would require investors to give notice — potentially up to 180 days — before their investment is redeemed from an open-ended property fund.
It is an attempt to curb the “liquidity mismatch” between the underlying property held in such funds and the daily basis on which investors buy and sell units.
imogen.tew@ft.com
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