property fund in pension

[Bob-iylho]

7.5% of my pension investment is in a property fund.
The fund was frozen back in march and reopens trading on the 13th oct, whats the collectives opinion of either sticking with it or getting the "fu*k out asap".
The fund has performed well in the past and they seem swithched on selling some commercial property for residential. 90% of rent has been realised over lockdown.

I'm a bit of a divvy. The advise I have received is stick with it and review regularly, but my gut says sell asap, take a hit and invest in alternative stuff.

Advice please.

[Cheib]

It’s totally dependent on what it’s exposures are....What % is Commercial vs Residential ? if it’s Commercial Property exposure is logistics parks it’s probably okay but if it’s Central London office blocks that’s a different matter. I guess the big question is how much is it down since it was gated and what the discount is to NAV though that will only be an estimate.

The problem with Property as the underlying for funds is that the asset is much less liquid than the fund itself...they should come with a massive health warning IMHO.

[Simpo Two]

For only 7.5% and the constant on/off aggro I'd bail when you can. I don't like having stuff I have no control over.

[LeoSayer]

Cheib said:

The problem with Property as the underlying for funds is that the asset is much less liquid than the fund itself...they should come with a massive health warning IMHO.

Agreed and I discovered this myself when in an L&G Property fund a few years back.

The price jumped +/- 4% every few days depending on whether the fund had net subscriptions or redemptions. My pension admin had no explanation for this and I worked it out myself in the end.

Why have a daily dealing fund when the manager has no hope of trading the underlying assets on a daily basis?

I probably have enough exposure to the property market from holding index trackers.

I sold out around 18 months ago.

[HootersGsy]

LeoSayer said:

Agreed and I discovered this myself when in an L&G Property fund a few years back.

The price jumped +/- 4% every few days depending on whether the fund had net subscriptions or redemptions. My pension admin had no explanation for this and I worked it out myself in the end.

Why have a daily dealing fund when the manager has no hope of trading the underlying assets on a daily basis?

I probably have enough exposure to the property market from holding index trackers.

I sold out around 18 months ago.

And this is why as a finance professional I will never go near any open ended fund that owns illiquid assets. If you buy into a property fund you should be with it for the long haul (i.e. a closed ended fund), it's not an asset class you can trade on a whim.

As to the OPs question, depends entirely on the pricing. If you can get out at a good price I would probably do it but be aware there are likely to be many others trying the same and there may not be liquidity to satisfy all the redemption requests.

[ellroy]

What’s your timescale for holding?

If it’s long term the income may still be worth holding on to, especially given current climate.

I’d be wary about pulling out day one, as has been said, there may be a fair few waiting at the exit door and a haircut may await.

[Bob-iylho]

Thanks chaps.
I'm 55 probably don't need to look at using pension till 65. also pension will be a secondry "income" in retirement.
It is an L&G fund.
I can live with it dropping a bit.
I have no idea how the selling would work, is it first come first served, or do the big boys get priority.
I don't want to sell blind and find I get 50% due panic.

[covmutley]

I too have about 10% of my SIPP in a property fund that is currently untradable.

I could be wrong, but I'm not worried. 20 years off retirement me, so more than enough time to get back where it was, then crash again...

If you are 10 years away, it will be fine im sure. Covid will no doubt shake up property to some extent, but it can be flexible - conversions, redevelopment etc

[Cheib]

Bob-iylho said:

Thanks chaps.
I'm 55 probably don't need to look at using pension till 65. also pension will be a secondry "income" in retirement.
It is an L&G fund.
I can live with it dropping a bit.
I have no idea how the selling would work, is it first come first served, or do the big boys get priority.
I don't want to sell blind and find I get 50% due panic.

Everyone would be Pari Passu when it comes to selling although clearly if a large institutional client owns it and decides to exit that will have a detrimental effect on anyone left in as they will probably have to gate the fund again. It’s another question to ask how many people own the fund and what are the % holdings of the biggest.

[ThumperMc]

I dumped anything property related from mine about a year ago, then went heavy into Sharia Law Equities.


Stonks go up.