Hargreaves Lansdown chief executive Peter Hargreaves says repricing property funds is like market value reductions on with-profits funds, with the loudest complaints coming from IFAs who “recklessly” piled clients into them.
He says many IFAs “took the least line of resistance” with investors, making easy prop-erty sales, just as they sold too many single-premium with-profits bonds, and now many are unhappy they cannot pull their money out of the market at net asset value.
He says: “There is a definite ring of déjà vu. Many IFAs who recklessly took the least line of resistance with their investors and placed far too much of their money in property bonds will feel aggrieved, as they did when they sold too many single-premium with-profits bonds.”
Hargreaves believes fund firms that run property funds without the backing of a major life company will be the worst hit as they cannot sell properties to their life and pension funds to provide liquidity for retail fund outflows.
He criticises commentators for claiming that companies are not treating customers fairly by introducing pricing changes, when the firms are looking after long-term investors.
Syndaxi Financial Planning managing director Robert Reid says: “My issue is not with the fact that these are long-term funds with short-term corrections but that the communication of these pricing changes has been appalling.
“The asset allocation indicates that most of these funds can cope, yet these firms have made these decisions. It is the poor communication that has led to people jumping to conclusions.”