Pension - property fund temporarily stopped trading
Discussion
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?
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?
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.
Surprised you only just had the letter though as it's been suspended for 2+ months.
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.
https://www.ftadviser.com/investments/2020/06/08/u...
Not just Aviva.
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?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.
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.
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....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.
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.
The latter are much less likely to be suspended because they own tradable assets, whereas companies owning property only have cash constraints.
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?'The latter are much less likely to be suspended because they own tradable assets, whereas companies owning property only have cash constraints.
Why invest in property directly, if you can invest indirectly and avoid the pitfalls?
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