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Property funds shut until prices go down

Scottish Widows has temporarily shut its property funds to new

business because of concerns about the commercial property market.

Widows says that the popularity of property as an asset class in the

current turbulent stockmarket environment is driving up prices to

levels where it is unwilling to buy.

The company says it is being forced to stockpile cash and this is

affecting returns for existing customers.

But Widows believes there will be a price correction in the coming year.

The move does not affect existing policyholders who want to make

incremental payments, transfer into the property fund where it is an

option or withdraw their money.

The temporary suspension starts on April 11 and the final date for

the issue of new quotes is April 4. Widows has not said when it will

reopen the funds. It says it will continue to monitor buying

opportunities in commercial property and once it is happy that

quality properties are again available at appropriate prices, it will

reopen the fund.

Both the property fund and the pension property fund are top-quartile

performers.

Pension & investment sales director Ciaran Woods says: “We need

to ensure that funds are invested to meet policyholders&#39

expectations. Due to the current popularity of property as an asset

class, we feel that temporary suspension of the funds demonstrates

prudent management practice in protecting existing policyholders and

returns on the fund.

“The consistent top-quartile performance of our property funds is a

direct result of the fund managers&#39 ability to invest in properties

of appropriate value and quality.”

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