Canada Life
Meanwhile, Canada Life has become the seventh company to suspend trading in its commercial property funds, worth up to £500m ($646m, €584m), as the Brexit fallout continues to spook investors.
It follows similar decisions announced by SLI, Aviva and M&G earlier this week to cease trading on their respective funds due to an increase in redemption requests triggering share sales in property and asset management companies.
On Wednesday, Henderson Global Investors and Columbia Threadneedle also announced a similar postponement – marking the last of the five major property funds to shut their door to redemptions.
Figures published by Deutsche Bank show that the total size of the retail UK commercial property market is around £25bn. More than £15bn worth of assets or 60% has been gated in three days this week alone.
Canada Life said that the company took the decision to suspend trading on Tuesday at 3pm. The halt in trading could last up to six months to ensure “property values reflect market conditions”.
“Following last month’s vote to leave the European Union, a combination of uncertainty around the pricing of commercial property assets and the recent rise in requests to withdraw from property funds, has meant Canada Life taking the decision to immediately defer requests for withdrawals.
“Deferring requests to withdraw allows us to protect the interests of all investors in the property fund, including those who plan to remain invested for the medium to long term,” said a spokesperson for the life company.
Investors will not be able to cash in or switch units out of Canada Life Property Pension Fund; Canada Life Property Life Fund; Canada Life Property Pension Fund; Canada Life Property Life Fund; Canada Life UK Property Life Fund and Canada Life UK Property Pension Fund on the date they submit a request.
Investment Association
In response to the fund suspensions, the UK’s Investment Association (IA) issued a statement on Thursday supporting the move.
“Fund investors’ interests are protected in a number of ways and the ability to suspend redemptions is one of the most important tools because it prevents fund managers from being forced to sell, in this case property interests, too rapidly.
“Suspension is a mechanism that is laid out under stringent FCA regulations, and when it is employed by one of our members, it shows that the regulations are working as they are supposed to,” said the trade body.
