Reopened real estate funds lost £ 166million amid record month for UK fund industry


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Real estate was one of the only asset classes to experience cash outflows amid a record month for UK domiciled funds in November, amid a decisive election in the US and Positive vaccine trial data has boosted investor confidence.

In total, the UK fund industry raked in £ 8.3bn in the month, breaking the previous record of £ 5.7bn in September 2017, according to the latest figures from the Investment Association. Equity funds took in £ 4.1bn, mixed assets £ 2.3bn and fixed income securities £ 1.2bn.

But real estate funds faced net outflows of £ 147million in November despite the suspension of a significant portion of the UK Investment Association’s direct property sector.

The final asset class AI looks at is labeled Other and includes sectors like Specialist, Targeted Absolute Return, and Volatility Managed. These sectors collectively benefited from net inflows of £ 265million, although fortunes were mixed, with volatility management reaching £ 389million while the targeted absolute return lost £ 118million.

IA chief executive Chris Cummings (pictured) attributed the record month to the breakthrough in the coronavirus vaccine and a clear result in the U.S. election. But Cummings added: “Given the difficult start to 2021 with an increase in coronavirus cases, it remains to be seen whether investor confidence will continue into the new year.”

L&G fund sees assets drop by £ 500million after suspension

Within real estate, IA UK Direct Property lost £ 166m over the month, while IA Property Other brought in £ 17m.

The industry’s largest L&G UK Property fund was among the few funds that were reopened for redemptions in the month after lifting its seven-month suspension on October 13.

The assets of the L&G UK Property fund stood at £ 2.3 billion at the end of November, according to its latest fact sheet, against £ 2.8 billion at the end of September, when its previous fact sheet was published. In total, assets fell by £ 477.4million in the six weeks following the lifting of its suspension.

Threadneedle UK Property Paif was the industry’s first suspended fund to reopen for buybacks, when it did so on September 17. It faced buybacks of £ 68million for the remainder of the month, or around 7% of assets at reopening, according to Morningstar data.

The Standard Life Investments UK Real Estate and Aberdeen UK Property funds reopened on November 16.

The Janus Henderson UK Property Paif and Aegon Property Income funds are among the series of funds holding billions of pounds in assets that have yet to reopen.

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