Valuer ‘material uncertainty’ forces string of managers to close UK open ended funds

Aberdeen Standard Investments has just become the latest manager to suspend dealings in UK open ended funds as UK valuers return to caveating valuations because of the coronavirus crisis.

The manager became the fourth this week to succumb as it announced today that it has gated its £1.7 bn Standard Life Investments UK Real Estate Fund and the £1.1 bn Aberdeen UK Property Fund.

Today’s news follows a decision earlier this morning by Aviva Investors to suspend its £460 mln UK Property Fund, while last night Janus Henderson suspended dealing in its €2bn UK open ended property fund.

On Monday, Kames Capital said it was to gate its £500 mln Property Income Fund.

A spokesperson for ASI said: ‘Following the introduction of "material uncertainty" clauses into valuations by UK property fund industry valuers, we have suspended dealing in our two open ended UK property funds and their feeder funds.'

Janus Henderson announced last night that CBRE, the appointed independent valuer of the UK Property PAIF, had ‘material uncertainty around the valuation of UK physical properties across the market, and therefore the assets in the portfolio, due to the COVID-19 pandemic.’

Janus Henderson said that the fund had 17.4% of cash as at 29 February but given the valuer’s warning and updated rules issued by the UK’s Financial Conduct Authority after the turmoil that hit OEFs after the Brexit vote, it had closed the fund.

Aviva Investors said Knight Frank, valuer of its OEF, had also evoked ‘material uncertainty.’

One other UK open ended real estate fund is already closed: M&G gated the M&G Property Portfolio on 4 December citing ‘unusually high outflows.’ At the time the percentage of cash had dwindled to 5% and the value of its assets had fallen 7.7% in a single intra-month valuation.

Unlike some other managers, M&G cut some of its charges on the fund.

Commentators said the fear now is that the contagion will spread to other OEFs and they will have to follow suit, even if their portfolios do not have a high percentage of retail assets.

ASI said trading in the UK property market ‘is being severely impacted.’


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