Standard Life is apparently having problems with their property fund. However, these problems are not related to poor performance but the success of their fund, the amount of new investors in the fund and the lack of suitable properties to buy.
As the markets continue to be volatile, many people are investing in property funds for stable and rising returns. The problem for Standard Life (and many other providers) is that money is pouring into the funds, which then has to be invested in properties of the right type and quality.
Standard Life has restricted new investments into its Life Property Fund to 25% of the total money invested. They believe this will help keep the influx of cash at a desirable level. Scottish Widows have completely blocked new investments for now into their property fund.
Industry commentators believe that other companies will follow the lead of Standard Life and Scottish Widows if the demand for property funds increases.
Our View
Whilst new investors may not be happy with their investment being limited to 25% in property, Standard Life are doing what they can to protect existing investors and this is commendable. Once the stock markets reach more solid ground the demand for property funds is likely to reduce. This may mean restrictions being lifted.