Suspension of funds?

JSmith321

Yesterday Kames Capital banned trading on its £585m Property Income fund and it was followed this morning Janus Henderson, BMO, Aviva and Aberdeen Standard. Columbia Threadneedle is the latest to join them in the last few minutes suspending dealing in the Threadneedle UK Property Authorised Investment Fund blaming "exceptional uncertainty".

Is there a danger this could spread to all funds preventing trading, what are the consequences of this? Could customers lose out like the recent Woodford case?

Thrugelmir

Issues with investing in an open ended funds that hold illiquid assets in their portfolios is well documented. Not the first time that property funds have been suspended. The matter was already under review before the current crisis. There must be a guaranteed certainty that in the future that such funds are going to face very different regulation or face the possibility of taking a very different form. 
While there's much noise about events such as these. Worth noting that shares frequently get suspended on a temporary basis if the market in them is extremely volatile. Not always possible to trade the minute you wish to. 

Albermarle

Open ended property funds getting suspended in a big market downturn , is no surprise at all .
Funds holding mainly more liquid assets should  continue trading .

AnotherJoe

JSmith321 said:

Is there a danger this could spread to all funds preventing trading, what are the consequences of this? Could customers lose out like the recent Woodford case?

No and no (with a caveat). Property and unquoted investments are very different to others that have a price albeit you may not like it. 

The caveat is that investors could lose out on the same scale as woodford or more just for different reasons. 

Linton

When you sell a fund the manager must at some stage sell the corresponding underlying assets. The reason for funds such as the ones you list stopping trading is that they invest directly in property.  A fund investing in shares can sell its assets at the market price within seconds.  A physical property would take a long time to sell and of course would not be sold just to cover your transaction.  For thus reason direct property funds need to keep a buffer in cash.   However this buffer needs to be managed to avoid depleting it too quickly.

dunstonh

The property funds are being suspended due to FCA rules that require them to do so if they cannot provide valuations.  As the valuers have told their staff to stop work, they cannot be valued.  Hence they are suspended.   Once the valuers go back to work and value the properties, the suspension will be lifted.

Could customers lose out like the recent Woodford case?

Woodford was suspended for totally different reasons.