Open-ended property fund closures fail to spark platform provider interest in LTAFs
Hargreaves Lansdown said it is «committed to analysing new funds as they come to market» and will review its position in a year’s time.
In the last seven days, M&G and Canada Life Asset Management have suspended and set out plans to close their respective UK open-ended direct property vehicles due to a surge in investor redemptions and dwindling demand.
These two are the latest in a string of open-ended property fund closures in recent years, including Aviva UK Property and Aegon Property Income, which are still being wound-up more than two years on.
M&G suspends open-ended UK property fund ahead of closure
The FCA opened a consultation in 2020 into the future of open-ended property funds in a bid to reduce the potential for investor harm resulting from the vehicles' liquidity mismatch issues. However, the regulator has not yet outlined its conclusions or published a policy statement.
In late 2021, the financial watchdog introduced the LTAF, a new category of authorised open-ended fund designed to efficiently invest in long-term and illiquid assets, and has since set out its final rules to allow a degree of retail investor access to the structure.
Following the news of the closure of M&G Property Portfolio on Thursday (19 October), M&G global head of product and distribution Neal Brooks told Investment Week the firm had found «no alternative» offering investors a comparable product to the open-ended property fund structure.
Investment platform providers also told Investment Week they are still reluctant to launch products with notice periods, as current market infrastructure is based on daily dealing.
Emma Wall, head of investment analysis at Hargreaves Lansdown, said the firm had reviewed LTAFs across the business,
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