Yet, that was exactly the worry on markets this week following Standard Life Investment's widely-reported move on Monday to suspend trading on its £1.6bn UK Real Estate Fund. This was followed 24-hours later by similar announcements from first Aviva Investors and then M&G Investments.
The moves were also accompanied by a sharp declines in the shares of UK house builders Barratt Developments ( -8.2%), Taylor Wimpey (-6.7%), Berkeley Group (-6.6%) and Persimmon (-6.6%) on Tuesday.
The reason provided by the fund groups for the suspensions was the temporary lack of liquidity caused by investor uncertainty over the prospects for UK property.
Investor safety first
And, the argument goes, it is better to suspend redemptions for a while than be forced into a property fire sale that will hurt even those investors that choose to stay in.
Indeed, as the Financial Conduct Authority’s new head Andrew Bailey pointed out at the press conference following the release of the Bank of England’s latest Financial Stability report, far from being a “panicked measure” such a suspension of trading is built into these funds in order to deal with the fact that these are open-ended funds that are required to be revalued at high frequency but yet hold illiquid assets.
"Long lines of people clamouring to get their money out of an investment is never a good image"
The problem is that, while Bailey said the suspensions are exactly what the FCA wants to see from a conduct point of view because it ensures that there is no differential treatment of shareholders, such a move can induce panic, rather than calm it.
According to the fund managers, the uncertainty was predicated on the result of the 'Leave' vote in the recent referendum, however they have been suffering redemptions for some time now, evident in the recent moves to bid pricing by a number of them.
For Fundhouse MD, Rory Maguire, this is where the heart of the problem lies.
“Many asset managers appear to be blaming Brexit – and we find this disappointing. The real issue is that these funds are just illiquid, it is as simple as that,” he said.
And, he added: “If they experience outflows in a similar magnitude to the inflows they have received, then these funds have indigestion challenges. We sense more issues down the line for these funds and expect more to close on a temporary basis.”