Ryan Hughes, head of active portfolios at AJ Bell, comments on Kames’ decision to suspend the Property Income Fund:
“It appears Coronoavirus has claimed its first fund suspension with the Kames Property Income fund suspending, once again highlighting the problem of shoe-horning an illiquid asset class into a daily dealing structure. At the end of February the fund was running with cash of around 11% but events have moved quickly in recent days making it difficult for independent valuers to make accurate valuations of the underlying properties. In line with FCA rules, this uncertainty over what the underlying assets are worth makes suspension inevitable in order to protect existing investors in the fund. It’s also in line with our comments last year when we suggested rule changes would make suspensions more likely.
“With M&G Property Portfolio having been suspended since December last year, it raises serious questions about whether we’ll see a chain-reaction effect and see other property funds suspending. This further reinforces the need for the FCA to make material changes to the daily pricing structure of property funds given the challenges that exist in the market when major uncertainty strikes.”