Saw earlier today that several massive Commercial Property investors, (Standard Life, Aviva, Norwich Union in old money, and M&G) have imposed restrictions on folk taking their investments out.
In a nutshell, it means they have experienced, or expect to receive, instructions from major holders that they want to redeem their money. QED, they have lost faith in the UK Commercial Property market as a low risk home for their cash.
Billions of £££ now effectively tied into an asset class that folk want to get out of.
Technical phrase is they have switched to a swinging single price. Oooh er.
All good stuff. Not.
To be fair, when you invest in this type of commercial property fund, it's made
explicitly clear from the start that this type of investment is
illiquid. You can't buy and sell these investments as easily as you can shares. The fund manager has to physically sell a shopping centre, an office tower, a retail park etc to meet all of the redemption's. These things can take time.....a long time!
Again, it is made explicitly clear from the start that during times of high redemption's, the selling of your investment may be suspended. Anyone that can not understand this basic concept deserves to find out the hard way. These are long term investments, not something that you can casually buy and sell on a day to day basis.
This is not being caused by 'instructions from major shareholders', but a huge number of small, ignorant investors panicking. One of the first rules of investing is to not invest in something that you do not understand. But many people still do. People are advised from the start that these are long term investments, but do so anyway and check there investment on a day to day basis. Would you panic and sell your house because the value went down over the last month? Of course not!
It's by far more sensible to invest in the shares of property related companies, rather than invest in actual physical property funds. It's simpler and easier to get your money out if you do decide to sell.