Columbia Threadneedle has yielded to redemption pressures, shuttering its £1.3 billion UK Property fund, following the closure of most of its peers.
The decision, which the house said applied from 12pm today, followed a wave of redemptions which have put open ended funds in the sector under greater pressure than at any time since 2008.
‘We have not been immune to the recent trend of retail outflows from the sector and so far these requests have been met from the cash balance retained within the Threadneedle PAIF,’ said the company in a statement.
‘However, it is expected that these requests to sell will continue for the time being due to uncertainty in the market following the UK referendum result, therefore the temporary suspension of dealings allows sufficient time for the orderly sale of assets, and protects the interests of all investors.’
Around £14.3 billion in investor capital is now held in shuttered property funds, following suspensions by Henderson, Standard Life, M&G and Aviva, or almost 60% of the £25 billion in UK commercial property investment reportedly held within fund structures.
Speaking yesterday ahead of the most recent closures, Financial Conduct Authority chief executive Andrew Bailey said that the regulator may have to re-examine sector liquidity rules.
Research from the Federal Reserve Bank of New York has warned that gating policies may be counter-productive in encouraging investors to bail out before they get locked in.
‘There are situations in which informed investors would wait until the uncertainty is resolved before redeeming if redemption fees or gates cannot be imposed,’ wrote the team, headed by the bank’s senior economist Marco Cipriani.
‘But those same investors would redeem pre-emptively if fees or gates are possible. Pre-emptive runs that can be caused by the possibility of gates or fees may have damaging negative externalities.’