Property Fund - Suspended

tg99

homerhotspur wrote: »

I ,too, have learned a bit about these funds( I have Henderson). I can understand why this is happening but I just wondered , out of interest, whether there is something in the small print of these funds whch allows them to withold your money? Say you needed it in an emergency, can you withdraw it under certain criteria?

The prospectus details that they can defer or suspend redemptions which means you can't withdraw your money until it reopens for dealing. It also states that the valuers may need to make a fair value adjustment in certain circumstances as has been the case post brexit.

Personally, I'm guessing that a lot of investors don't read the full prospectus and just read the KIID so given what happened in the financial crisis and the particular risk of suspension with property funds then I would have thought the KIID should make it clear / highlight to a greater extent the risks of suspension.

tg99

dunstonh wrote: »

1 - most allocations to property tend to be no more than 15%. So, it is a minority holding.
2 - most advisers wont be authorised to recommend the alternatives (IFAs can but most restricted wont).
3 - No FSCS protection on the alternatives.
4 - the alternatives are considered higher risk and specialist.
5 - habit

Habit may seem strange but these property funds have been around a very very long time and been fine. Insurance companies have done a good job with property funds historically. in most periods, bricks and mortar unit linked funds tend to be steady performers with low volatility. However, that 5% of the time when things are bad causes periods like this. For the long term investor, which is the type most advisers deal with, this is not an issue. They sail through it and come out the other end. For the trader type investor, they should never be in these. And I suspect it is the trading types that have gone into them and inflated things and it is those that are trying to pull out.

Trends are changing and perhaps property funds need to be restructured to reflect those changes. Who can influence those changes? The FCA. So, I guess we wont be seeing any changes soon then!

It may also be that advisers buying into funds for their clients over the last couple of years were swung towards the open ended version rather than a REIT given the latter were trading on decent premiums to NAV up until last year. Hence the risk in a downturn of not just a fall in NAV but also double whammy from a decline in the premium and likely shift to a discount.

Personally I have used a mixture of REITs and open ended in the past, making sure that any capital in the latter was not something I would need to access even in an emergency. Key advantage of open ended in my view is that in a downturn you have more chance of being able to exit at a better NAV than in a REIT providing you follow the market closely and act quickly - appreciate this is not the kind of thing many retail investors will have time or resources to do though. From my experience, there will typically be a window of opportunity to exit before the gates close and fair value adjustments are made or NAV starts to decline materially; whereas the REITs will have already moved instantly to discount price falls (ie by moving to a big discount to NAV). For example, you could have sold almost all open ended vehicles on Fri 24th June without having any fair value adjustment hit other than Henderson I think, whereas the REITs fell sharply on the 24th.

homerhotspur

I agree, and I have never seem it mentioned in any of the popular articles and magazines on investing/choosing funds. Propertyfunds were being widely recommended 12 months or so ago and I never saw a mention of this possibility -yes the liquidity thing was mentioned but not that you could be prevented from actually withdrawing your own money.

Dird

masonic wrote: »

My degree included a year in industry
I'm not really seeing the value in them gaining their job experience outside the UK, nor what would drive them to return having settled there. As an interviewer, I would consider their experience less relevant than a candidate who has experience working within the UK. I would be very wary of putting them straight into a senior role.

Everyone & their mother does a placement year now. If HR wasn't so anal they could just hire sixth form grads to do the same role and avoid 3 years of missed time/student debt.

What would drive them? Money. 800k Polish people were settled in Poland but still decided to move here.
I don't see how a recruiter would view a person's experience "less relevant" if they've been managing a fund against European markets or writing software at Nokia for the last 10 years, just because they did it without a UK postal address. It's not like they'd accept a junior/analyst role with that kind of experience. You get the same thing all the time in the other direction, some old journeymen contracting around Australia/Middle East/other countries on the basis of "experience"

bigadaj

masonic wrote: »

Well, perhaps that's the case. All I know is that a very significant minority of my colleagues are EU nationals recruited out of UK universities. We've been able to hire them (thereby retaining them in the UK paying UK taxes) because they have the right to work in the UK. We have interviewed a number of very talented non-EU nationals without the right to work who we would have liked to have recruited, but the red tape involved has proven a non-starter. So you might argue that those EU students we do attract are not the most able, or perhaps you think those with the wealthiest families are already over-represented, but it seems to me our ability to retain them is under a degree of threat. The problem is, if it becomes as difficult to employ EU nationals as those from the rest of the world, we're not seeing enough UK graduates/postgraduates who are good enough to make up the balance.

Ok, my comment was actually aimed at your conflation, accessibility and equality to access to education is obviously a different issue to immigration and free movement, though there's no doubt that non uk nationals studying at uk universities will rarely come from the poorer sections of the populations of their home countries.

There is a uk failure in training in many areas, and we seem to fail to train people properly and just fall back on the easy options of importing people. If you look at health for example were still using huge numbers of Filipino nurses, Indian doctors etc rather than training our own. This is hugely damaging to those countries.

I've worked with a number of eu and international graduates over the years but I haven't seen the distinction that you have, and think that better training of uk nationals would go a long way to filling a skills gap, just look at the common practice of poaching trained or part trained individuals in many areas to see the lack of investment that some companies make.

masonic

Dird wrote: »

Everyone & their mother does a placement year now. If HR wasn't so anal they could just hire sixth form grads to do the same role and avoid 3 years of missed time/student debt.

Again, it very much depends on the subject. There are plenty of pointless degrees. However, you couldn't put a school leaver in a scientific laboratory and have them contribute to a multidisciplinary research project without very close supervision and training over a number of years at significant cost to the institution training them.

What would drive them? Money. 800k Polish people were settled in Poland but still decided to move here.
I don't see how a recruiter would view a person's experience "less relevant" if they've been managing a fund against European markets or writing software at Nokia for the last 10 years, just because they did it without a UK postal address. It's not like they'd accept a junior/analyst role with that kind of experience. You get the same thing all the time in the other direction, some old journeymen contracting around Australia/Middle East/other countries on the basis of "experience"

What I doubt is that they would specifically want to come to the UK when they can move freely around the rest of Europe, but may not be able to do so in the UK in the future.

In terms of relevant experience organisational culture is key here. Leadership is done very differently in different organisations and in different parts of the world. Interviews are a very artificial situation in which it is unlikely you will be able to get a good enough steer as to how the individual is really going to interact with / manage others. Get it wrong and you run the risk of demotivating / losing part of your existing employee base. The low risk option is obviously to develop your own people into those senior roles, but where necessary, external appointments from other UK-based firms where you might have some knowledge that their ethos is similar to your own, is far preferable to taking a shot in the dark with someone whose experience has been built up in a very different working environment.

In any case, I don't want to derail this thread. We may just have to agree to disagree. I'm sure their are industries in which a university education is of far less real importance and that work in far more standardised ways across the world.

masonic

bigadaj wrote: »

Ok, my comment was actually aimed at your conflation, accessibility and equality to access to education is obviously a different issue to immigration and free movement, though there's no doubt that non uk nationals studying at uk universities will rarely come from the poorer sections of the populations of their home countries.

There is a uk failure in training in many areas, and we seem to fail to train people properly and just fall back on the easy options of importing people. If you look at health for example were still using huge numbers of Filipino nurses, Indian doctors etc rather than training our own. This is hugely damaging to those countries.

I've worked with a number of eu and international graduates over the years but I haven't seen the distinction that you have, and think that better training of uk nationals would go a long way to filling a skills gap, just look at the common practice of poaching trained or part trained individuals in many areas to see the lack of investment that some companies make.

Yes, I agree with pretty much all of that. Just to reiterate, I don't believe there is a difference in quality between UK, EU or non-EU students leaving UK universities. It is a numbers game. More than half of my company's employment needs can be met through recruiting UK nationals. The balance is currently being made up with EU nationals (most of whom studied here). But there are equally many EU nationals being turned out of UK universities who are unsuitable. So I don't believe I have seen a distinction, other than in accessibility to potential employers, which applies currently to non-EU nationals, but may in the future also apply to EU nationals.

DiggerUK

How a discussion on employing them with 'ologies' has entered this thread, has me puzzled.

Since this issue hit the news, I have been on a fast curve to knowing what these investments are. They don't just invest in the UK, but have investments all over the planet. So quite how a cross in a UK box has crashed values is a mystery.
The massive turn off for these investments, should have been the lack of liquidity when heading for the exit. Why anybody puts hard earned money in such danger will always amaze me.

The other false flag that raises its head every two seconds, is the nonsense that 'it was Brexit wot dun it' is wearing a bit thin. Bremain would have led to the same rammed exits......the reason?....the still, as yet, unresolved economic malaise. That is why these funds are frozen..._

gadgetmind

DiggerUK wrote: »

Since this issue hit the news, I have been on a fast curve to knowing what these investments are. They don't just invest in the UK, but have investments all over the planet.

Those companies and funds that have global exposure have done OK, but remember the prices are in post-referendum pounds, the value of which has dropped 12% against a basket of other currencies.

Those companies and funds exposed to the UK have been hammered.

UK property companies were doubly hammered as they are exposed in a gear way to smaller UK companies, which can reasonably be expected to now have a rather difficult time for at least a few years.

Some commercial property vehicles do have more global exposure, but the ones we're discussing here are *very* focussed on the UK.

So quite how a cross in a UK box has crashed values is a mystery.

Brexit was predicted to impact the value of sterling, UK GDP, inward investment, adversely impact smaller UK companies without global exposure, and impact UK property prices, mainly commercial. It's on track to deliver all of this and more.

No mystery involved.

the nonsense that 'it was Brexit wot dun it' is wearing a bit thin.

Draw a graph of the value in USD (or gold if you prefer!) of UK property funds. Put on this a vertical line when the referendum occurred.

Notice anything?

gadgetmind

masonic wrote: »

I don't believe there is a difference in quality between UK, EU or non-EU students leaving UK universities. It is a numbers game. More than half of my company's employment needs can be met through recruiting UK nationals. The balance is currently being made up with EU nationals (most of whom studied here).

I totally agree, though most of my EU nationals studied outside of the UK. There just aren't enough good people coming through UK universities, so we have to either spread the net wider when hiring into the UK, or set up offices elsewhere in the EU.

My team is already spread across four continents, and GOK how many countries, but for many smaller employers being forced to do this will be new, expensive, and potentially damaging.