Standard Life to open real estate fund next month

Standard Life Investments said it will lift the suspension of the UK Real Estate fund on Monday 17 October.

Standard Life, which was the first to close its property fund to redemptions as investors rushed to take their money out in the wake of the EU referendum decision, has now followed rivals Henderson and Threadneedle in re-opening its doors.

David Paine, head of real estate at SLI, said: “In the immediate aftermath of the EU referendum result redemptions from retail investor property funds increased dramatically whilst property transactions reduced significantly.

"During the period of suspension the fund has been able to restore liquidity through an orderly disposal of assets. We are pleased with the progress made and the removal of the Market Value Adjustment, and able to announce the reopening of the fund next month."

Analysts at Hargreaves Lansdown noted although a "semblance of normality" appeared to have returned to the sector, Aviva and M&G's funds were yet to re-open in the three months since the vote.

"The big freeze that beset property funds over the summer could well recur if the sector sees more large withdrawals, so investors should make sure they are willing to accept this ongoing risk, and to hold the funds for the long term," said senior analyst Laith Khalaf.

"One nagging concern for investors in the sector, beyond the prospect of future trading suspensions, is the high level of cash these funds now hold to provide daily liquidity for shareholders. This is a perfectly sensible strategy for a manager running an open-ended fund to operate, but in today’s low interest rate environment it will act as a drag on returns, which is yet another drawback for property fund investors to consider."