AWD Chase de Vere has called for a bit of perspective regarding property funds, saying recent changes have "spooked investors".
The firm is responding to recent moves by Standard Life, Prudential, New Star and Norwich Union to reduce payouts to those liquidating.
But AWD Chase de Vere’s Justine Fearns says investors must “stay calm”, pointing out the investment value still held in the funds is not affected.
“Generally speaking, property funds currently have enough liquid assets to adequately cover withdrawing monies,” she says.
“However, most will make changes to the pricing basis prior to reducing the cash element of a fund to protect remaining investors and ensure that those leaving the fund pay an appropriate share of the transaction costs.”
Fearns noted if outflows were strong, bid prices may be reduced to safeguard investors still in the fund.
“Knee-jerk reactions are often regretted,” she says.
“Property funds have been the country’s best-sellers for almost a year and a half.
“Recent investors need to stay with it for the long term, not jump in and out.”
AWD Chase de Vere says the industry could not keep up the 20% per annum returns, with many expecting high single digits this year.
“Property is a good diversifier and if the predicted stock market correction takes place, it should continue to show its uncorrelated strengths,” the firm says.
“Investors should take the time to review their whole portfolios, including all property, bond and equity funds, with their financial advisers.
“All markets face changing conditions as the world’s economy shifts the balance between the US and Europe and the emerging markets, especially China, India and other Asian tigers.”
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