Troubled sector
The open-ended property fund sector has been blighted by suspensions and liquidity issues in recent years, with many funds in the sector suspending redemptions in the aftermath of Brexit, and then as a result of the pandemic.
The particular issue for open-ended property funds is that if a market shock occurs and clients wish, in bulk, to withdraw their investment, the fund has to sell property to raise the cash.
Even in benign market conditions, it takes time to sell property. This creates a "liquidity miss-match", whereby the funds offer daily withdrawals, but the assets take multiple days to sell.
This leads to suspensions, and has prompted the regulator to create new rules to restrict property and certain other types of funds from offering daily liquidity, instead requiring a notice period.
The imminence of such a regulatory change has, in Janus Henderson's view, led to a wave of withdrawals from clients, and so prompted the sale of the fund's assets and winding up of the mandate.
ruby.hinchliffe@ft.com and david.thorpe@ft.com
