Commercial Property Fund Update
I’m sure you will have heard ongoing news coverage regarding the status of a number of UK Property funds, investment funds that hold ‘bricks and mortar’ commercial properties (industrial, retail and offices) in the UK. This media coverage has majored on the suspension of trading of funds at household names such Standard Life, M&G, Aviva and Aberdeen Asset Management, to name but a few.
Most of you have a small exposure ( a standard allocation of 5%) to the Legal & General UK Property fund, which has today announced a reduction in the value of the fund (not a suspension of trading), to deter investors from cashing out. We see this as a sensible precaution and will of course keep you posted if this situation changes. See it’s press release here.
To put this in some context, L&G UK Property fund is one of the largest and most robust of all UK Property funds. With circa £2.3Bn in assets spread across the UK over 104 properties and 96% occupancy, they are well placed to ride out the current post Brexit Property storm. The fund has 19% of value held in cash to cover redemptions. In terms of diversification, Central London (which appears to be bearing the brunt of value reductions) represents only 10.93% of the fund. The rest of the fund is spread across properties throughout the UK. You can view the fund fact sheet here.
Actual annualised performance over the last 1, 3 and 5 years has been 8.02%, 10.91% and 7.35% respectively with low volatility (measured by a standard deviation of 1.7%).
Manse Capital will therefore take no action, apart from when your rebalance is due and at this point will exclude the L&G fund from the rebalance until trading returns to normality.
As always, if you have any questions or concerns regarding the L&G position, or indeed any other matters, please don’t hesitate to call.