LGIM set to reopen property fund in October
LGIM will reopen its property fund in October, seven months after the coronavirus crisis forced it to suspend dealing.
In an update today, LGIM said its authorised fund manager, L&G Unit Trust Managers, intends to reopen the property fund and its feeder fund on 13 October.
The board is now “confident” in lifting the suspension as the three conditions for reopening have now been met.
It comes after Columbia Threadneedle and St James’s Place unfroze their funds earlier this month following new guidance on valuations.
Property funds were frozen in March after their valuers determined the impact of the pandemic had created “material uncertainty” over the valuation of property.
The outbreak further highlighted issues surrounding illiquid holdings in the open-ended funds after concerns were raised last year in the wake of the Woodford saga.
But the Royal Institution of Chartered Surveyors recommended funds lift the material valuation uncertainty on UK property earlier this month, even amid Brexit and second wave fears.
In June, BMO became the first firm to unfreeze its property fund, reopening its £449m Property Growth and Income strategy.
In an update on its website, LGIM said: “The Funds’ liquidity position remains well-placed to meet investor intentions and still has sufficient liquidity after redemptions are met”.
“We will continue to monitor investor intentions and the factors outlined above in the lead up to the planned opening date”, it added. “Should anything materially change, further communications will be issued.”
A recent consultation from the Financial Conduct Authority (FCA) proposes extending the notice period for redemptions in property funds to 180 days, raising questions about how the funds may operate post-Covid.
The regulator said a notice period would go some way in solving the “liquidity mismatch” between the underlying property held in the funds and the almost daily basis in which investors buy and sell units.