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One of the funds had over 25% in cash
my guess is they see a problem ahead and my guess is they are waiting to see the falls In prices
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Probably have redemption's and expecting more. Don't want to be caught out like last time so first out get their monies quickly and the rest get stuck in . Its classical property funds. Currently you will find most property funds have increased their cash positions over the last few months. Another point is that investors are paying full management fess for only 80% of the assets invested.
Very interesting point about not being able to pull your money out because you're blocked from doing so.
I wonder how many casual investors know of that possibility?
Adam, actually in a financial meltdown all funds are able to hold back redemption's but it is particularity relevant to property funds as it takes time to sell a property. Just look back and see what happen in the 2007 crash. I also expect similar problems could arise if Brexit blows up. Also the point is with funds should redemption's take place and they need cash it is usually the most liquid stocks that are sold leaving the fund full of the weaker shares and hence price fall.
Ratings agency Fitch has warned that fear of the potential for steep property price falls in reaction to Brexit developments could lead to property investment funds closing to withdrawals.Fitch said it believed there was potential for market reaction to Brexit developments to be more severe than the reaction to the referendum result, particularly if there is a no-deal Brexit.
“Cash levels are marginally better than in mid-2016, when several funds gated due to investor anxiety linked to the UK’s referendum on EU membership,” Fitch said.
“But we do not think liquidity is strong enough to prevent withdrawal restrictions should investors fear a steep market drop due to Brexit developments in the coming weeks.”Full/source article
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
When an investor invests in managed funds you have to look at the bigger pic
funds are similar to investing in houses
and if the property market takes a dive you don’t sell off
the canny investor invests more
the stock market in the past year has been a point in fact it’s dropped by over 10% and I personally have been investing as much as I can
Property funds always have yields just as in BTL if the capital value drops the rent still comes in
I use two property funds
and L G
both have done ok this year about 5% yeild tax free in an ISA or a pension is ok
i much prefer infrastructure funds long term
but property funds are ok
but you should never sell in a crashvbutbit can be the time to buy