What lessons can we learn from the suspension of open-ended retail property funds?
The UK commercial property market delivered a total return of 9.9% p.a. over the five year period to June 2016 (IPD Quarterly Index). Towards the end of 2015, DTZ Investors, along with some other investment houses, anticipated property market returns moderating in the second half of 2016.
With a lower return outlook following a period of strong growth, retail funds started to experience outflows early in 2016, before the EU Referendum date was announced. Following the outcome of the EU Referendum in June 2016, and the significant further redemptions requests which were received by a number of the open-ended retail funds, fund managers typically took one of two courses of action: suspending redemptions or imposing discounts to net asset value
