Following the EU referendum, equity markets, including commercial property funds suffered a dramatic fall. This caused a number of property funds to suspend trading, some of which we offered as part of our investment product range.
The two affected property funds were:
- Henderson UK Property PAIF Feeder fund - suspended on the 5th July 2016 and re-opened for trading on the 14th October 2016
- The M&G Feeder of Property Portfolio fund - suspended on the 4th July 2016 and re-opened for trading on the 4th November 2016
As of the 4th November 2016 both funds are open for trading again. As an investor you have full access, which means you can buy, sell or switch in and out of these funds as normal.
However, if you have a regular investment in either of these property funds, your monthly contribution will have been reduced by the amount normally allocated to that fund back in July 2016. The Investor Portfolio Service will not automatically increase your regular investment and will continue to collect the reduced amount (which excludes any property fund) unless you instruct them otherwise.
Regular investments that you made into other funds were unaffected, but the reduction of regular investment contributions into the property funds means that you may not achieve your investment objectives, or maximise your ISA allowance if you contribute directly into one.
If you had a regular investment you’ll be able to reset your regular premium to the amount before the suspensions. We’ll have sent you a letter if you were in this situation explaining what options are available to you.
Continued increased withdrawals from a fund can lead to managers having to sell properties held within the fund at prices that are potentially lower than market value. This is due to the demand to raise levels of cash within the fund so quickly.
The temporary suspension of dealing allows the fund managers to take time to sell properties, in a controlled manner, at more competitive prices.
Yes. Property funds are less “liquid” in nature. This means that the fund will take more time to generate cash when they need it. After the referendum, the fund received a lot of requests from customers to withdraw their money all at once. This provides a challenge as the fund will not have enough cash on hand to supply the customers, and may take time to raise the cash because properties take time to sell.
If you have a regular investment (e.g. a monthly contribution) into either of the property funds, it will have been reduced by the amount normally allocated to that fund back before the suspension. The Investor Portfolio Service cannot automatically increase your regular investment and will continue to collect the reduced amount (which excludes any property fund) unless you instruct them otherwise.
For example, if you had a £500 monthly contribution in which £50 was allotted to the above funds, then your monthly regular investment will have been reduced to £450.
Regular investments that you made into other funds were unaffected, but the reduction of regular investment contributions means that you may not achieve your investment objectives, or maximise your ISA allowance if you contribute directly into one.
When the property funds were suspended in July 2016, your regular investment contributions were decreased. For example, if you had a £500 monthly contribution in which £50 was allotted to the above funds, then your monthly regular investment will have been reduced to £450.
You may wish to increase this back to the original amount (£500 in this example) if you’re saving for something specific or have an objective in mind for your money.
If you had a regular investment feeding into either or both of the property funds then you’ll be able to reset your regular premium to the amount before the suspensions. We’ll have sent you a letter if you were in this situation explaining what options are available to you.
Property funds remain an important part of your portfolio because of the long term returns offered by this type of investment, together with the benefits of spreading levels of risk throughout your portfolio. These funds invest in physical property, which can lead to periods of illiquidity leading to a suspension in trading such as the one you’ve just experienced.
You should consider that there may be periods where the fund is suspended which means you won’t have access to your money within the fund should you wish to withdraw or switch. If you’re unsure whether property is an appropriate investment for you moving forward, we’d recommend you speak to your Nationwide Financial Planning Manager.
You can change your investments, including making up shortfalls:
- Online – visit the existing investors page and log in to the Investor Portfolio Service (IPS) or, if you’re opted into ongoing service, your Personal Finance Portal (PFP).
- By post – You can pick up a form from your local branch, or if you’re registered for the Investor Portfolio Service (IPS) you can download the form from your online account.
If you’d like advice on your investments you can book an appointment to see one of our Financial Planning Managers by calling us on 0800 030 4078 (lines open Mon to Fri, 9am to 5pm – calls may be recorded).
No, if you do decide to increase your regular investment, you won’t be charged an initial advice charge, but will pay a fund manager fee and platform charge for all money invested. Any other fees such as Ongoing Service will not be affected.
If you invested before 2012 and you now change your regular premium or make up any shortfalls, your charging structure may change by converting to a clean asset class. If you have any questions around this, please contact IPS on 0345 272 0089 (lines are open Mon to Fri, 9am to 5.30pm. Calls may be recorded).
If you have any specific questions around your investments that haven’t been answered within these pages, please contact your Financial Planning Manager, or call us on 0800 030 4078 Monday to Friday, 9am to 5pm.
This is not intended to promote or provide a recommendation in relation to our investment service. Any comments made are intended to provide general information only. If you would like any further information, please contact your Nationwide Financial Planning Manager.
The value of your investment can go down as well as up so you may get back less than you originally invested.