Aberdeen Standard Investments (ASI) will merge its Aberdeen UK Property and Standard Life Investments UK Real Estate open-end funds, as well as their feeder funds, after obtaining shareholder approval.
The consolidation of the two licensed real estate investment funds (Paifs) follows the merger of Standard Life with Aberdeen Asset Management in 2017.
Writing to fund investors in September, Aron Mitchell, director at Aberdeen Standard Fund Managers, said the merger of the fund into the SLI fund would represent the “best outcome for investors.”
“Aberdeen Paif and SLI Paif (and their associated feeder funds) have very similar investment objectives, key product characteristics and fund strategies,” he said.
“The merger of the funds will provide investors with a larger fund with a greater diversity of assets and investor base. This should translate into improved long-term performance for all investors. “
Unitholders of the Aberdeen Feeder Fund approved the resolution on October 8 and last Friday (October 15) the merger was approved by at least 75 percent of the shareholders of the Aberdeen Fund.
They will now have their stocks exchanged for stocks of “equivalent type and value” in the SLI Paif, according to Mitchell.
Fund transactions will be suspended on November 25 at noon until November 29 at 9 a.m. in order to allow the merger to take place.
ASI froze both funds in March 2020 following advice from independent appraisers that it was not possible to provide accurate and reliable appraisals for all properties held in the funds.
They were then both reopened in November of last year.
In May of this year, Aviva Investors announced the closure of its real estate fund due to liquidity issues.
The following month, Aegon Asset Management followed suit, due to similar liquidity concerns.
The FCA has been reviewing the fund structure for over a year and postponed its decision to reform the sector until May while it considers creating a new fund structure to address the problem.