Pension - property fund temporarily stopped trading

Pension - property fund temporarily stopped trading

Author
Discussion

.Adam.

Original Poster:

1,822 posts

262 months

Wednesday 8th July 2020
quotequote all
I have a pension with Aviva, with my monthly contributions split 3 ways, 40% of which goes into a property fund. I've just had a letter saying this fund has temporarily stopped trading(fund deferral), and asks if I want to direct my payments into another fund.

I'm not quite sure what to do, the pension has still got 25+ years to run, so is it okay just to leave as it is at the moment and just wait until the fund starts up again when things calm down a bit, or is this a bad idea? Should I be redirecting to another fund?

Mr Pointy

11,147 posts

158 months

Wednesday 8th July 2020
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Why would you pay money into a fund you can't withdraw it from? There's plenty of other funds to invest in.

Simpo Two

85,149 posts

264 months

Wednesday 8th July 2020
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Ah, Aviva Property, aka the 3-legged donkey fund. Yes, it does that sometimes. I'll be leaving as soon as it opens again. Was about to check out in January with my meagre winnings then thought I'd leave it to FY end... doh.

Surprised you only just had the letter though as it's been suspended for 2+ months.

Jasey_

4,823 posts

177 months

Wednesday 8th July 2020
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I think this is fairly "normal" for property funds during periods of un-certainty.

https://www.ftadviser.com/investments/2020/06/08/u...

Not just Aviva.

Simpo Two

85,149 posts

264 months

Wednesday 8th July 2020
quotequote all
Yep, I think because when you sell, or rather if too many people sell, they have to sell an office block which isn't a fast process.

Perhaps the answer is to invest in something one level removed so you can deal in units rather than office blocks?

xeny

4,270 posts

77 months

Wednesday 8th July 2020
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Do you want to invest in UK office blocks even 1 level removed?

Simpo Two

85,149 posts

264 months

Wednesday 8th July 2020
quotequote all
One might say 'It seemed like a good idea at the time'! You could argue now that prices are very low that it's a 'recovery' opportunity - but they're not accepting money which seems odd.

Mr Whippy

28,944 posts

240 months

Wednesday 8th July 2020
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Those office blocks will be swanky (read st prole hovels) high street flats in 5 years!

Hold!

xeny

4,270 posts

77 months

Wednesday 8th July 2020
quotequote all
Simpo Two said:
One might say 'It seemed like a good idea at the time'! You could argue now that prices are very low that it's a 'recovery' opportunity - but they're not accepting money which seems odd.
If you've no idea of the current value of assets in the fund, and units are frozen, then you don't have an established unit price to trade at?

outnumbered

4,067 posts

233 months

Wednesday 8th July 2020
quotequote all
40% into property is quite a high risk strategy, but if you don't need the money for 25 years, you have plenty of time to diversify if you want to, nothing much you can do right now.

Mr Whippy

28,944 posts

240 months

Wednesday 8th July 2020
quotequote all
Unless this is the beginning of the end of the current property bull run?

A flip now to higher interest rates and assets being abandoned in favour of consumption being propped up may be the order of the day.


Given the stimulus we’ve seen already, it does appear to be focussed on consumption and not pumping assets.

Simpo Two

85,149 posts

264 months

Wednesday 8th July 2020
quotequote all
xeny said:
Simpo Two said:
One might say 'It seemed like a good idea at the time'! You could argue now that prices are very low that it's a 'recovery' opportunity - but they're not accepting money which seems odd.
If you've no idea of the current value of assets in the fund....
Well they ought to have!

xeny

4,270 posts

77 months

Wednesday 8th July 2020
quotequote all
Simpo Two said:
Well they ought to have!
They'll have their own idea, but without a functioning market, it's only their idea.

Simpo Two

85,149 posts

264 months

Thursday 9th July 2020
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xeny said:
They'll have their own idea, but without a functioning market, it's only their idea.
So was the suspension across the whole sector from a higher authority, as opposed to just Aviva thinking 'st this is going wrong shut the door'?

xeny

4,270 posts

77 months

Thursday 9th July 2020
quotequote all
Simpo Two said:
So was the suspension across the whole sector from a higher authority, as opposed to just Aviva thinking 'st this is going wrong shut the door'?
Property really isn't my thing, but if you're drowning in redemptions with few people buying, and selling office blocks isn't a quick business, what do you do but suspend - you can't make the redemptions.

Once you're suspended, there's no buy-sell price discovery going on, so you can't have people buy in - there's no market, so no market price.

Condi

17,089 posts

170 months

Saturday 11th July 2020
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It depends how the fund are invested. Aviva fund owns property directly, other property funds own stocks and shares of companies involved in property, eg house builders, agents, other companies owning property etc.

The latter are much less likely to be suspended because they own tradable assets, whereas companies owning property only have cash constraints.

Simpo Two

85,149 posts

264 months

Saturday 11th July 2020
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Condi said:
It depends how the fund are invested. Aviva fund owns property directly, other property funds own stocks and shares of companies involved in property, eg house builders, agents, other companies owning property etc.

The latter are much less likely to be suspended because they own tradable assets, whereas companies owning property only have cash constraints.
Which makes perfect sense - witness 'Perhaps the answer is to invest in something one level removed so you can deal in units rather than office blocks?'

Why invest in property directly, if you can invest indirectly and avoid the pitfalls?

Mazinbrum

929 posts

177 months

Sunday 12th July 2020
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40% into a single property fund sounds very overweight to me, did someone advise that?

.Adam.

Original Poster:

1,822 posts

262 months

Monday 13th July 2020
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Yes, but it was a while ago now. I've redirected to other funds now.