Aberdeen adds 17% exit penalty to property fund

Exit sign

Investors in the Aberdeen’s UK property funds will face a 17 per cent exit fee, as more than half of the IA sector suspends trading due to an increase in redemptions following last month’s Brexit vote.

The asset manager confirmed it had one of the highest levels of liquidity compared to similar funds and had sold all quoted property investments in the week prior to the UK’s vote to leave the European Union.

Six major funds from the £25bn IA property sector have had to suspend trading this week due to liquidity concerns, with the latest being Columbia Threadneedle confirming suspension of its £1.4bn fund and Henderson confirming suspension of its £3.9bn.

Canada Life has also confirmed it is placing a freeze on £450m worth of property funds.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.

Laith Khalaf, senior analyst at Hargreaves Lansdown, says the funds could be suspended for months due to the “knee-jerk” reaction to commercial property in the Brexit aftermath.

Aberdeen will only place a temporary suspension on trading for a 24 hour period to midday Thursday to allow those who have already placed trades to withdraw if they do not want to be impacted by the change in pricing.

Orders made after midday 5 July will be subject to the diluted price.

Martin Gilbert, chief executive at Aberdeen Asset Management, says: “Reducing the share price of the Fund reflects the changing market conditions over the past week or so and uncertainty around prices in the property market; sellers requiring liquidity are having to market properties at sometimes significant discounts to their recent valuations.

“Aberdeen’s property fund continues to hold a good level of cash, which permits us to offer these options to investors, but it is imperative that we protect remaining holders by fairly reflecting the impact of short term trading on values provided to redeeming shareholders.

“The property market itself may take some time to find its level but we believe that the same factors that made property a good long-term investment yesterday remain true today.”