BMO and M&G — which run equivalent property funds — did not comment.
How it works
Rules announced by the Financial Conduct Authority last year require property funds to automatically suspend when their valuers find material uncertainty over the pricing of 20 per cent or more of their assets.
Major UK valuation houses have been meeting twice a week — in conjunction with the Royal Institution of Chartered Surveyors — to discuss market activity and decide if it is time to lift the material uncertainty clause.
If 80 per cent of a fund’s assets are in sectors of the market where the clause no longer applies, they are allowed to re-open.
What happened
The UK property funds available to retail investors, with about £13bn of assets between them, have been suspended since the third week of March.
Portfolios were gated because the coronavirus crisis had caused “material uncertainty” in the UK property market, meaning valuers were unable to value the assets within the funds with the same degree of certainty as would otherwise be the case.
The FCA is currently consulting on rules which would require investors to give notice — potentially up to 180 days — before their investment is redeemed from an open-ended property fund.
It is an attempt to curb the “liquidity mismatch” between the underlying property held in such funds and the daily basis in which investors buy and sell units.
imogen.tew@ft.com
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