Legal & General’s unit trust business is proposing to widen the direct property investment strategy of a fund to include indirect property holdings through real estate investment trusts (REITs).
The firm said this was in consideration of requirements for a daily dealing product for the sector.
UK property funds have suffered liquidity crises in recent years after they faced high levels of redemptions in stressed situations. Investing in exchange-listed trust increases liquidity.
Legal & General (Unit Trust Managers) proposed the measure for its L&G UK Property Fund (PAIF) and its feeder Fund, the Legal & General UK Property (Feeder).
The firm said it was committed to providing investors with access to direct UK property investments but that the strategy would be blended to combine direct UK real estate with global REITs, referred to as “(PAIF Hybrid)”.
With assets under management of over £1.2 billion, the L&G PAIF is the largest in the sector and one of the best performers over three and five-year periods, the firm said.
The PAIF Hybrid strategy would combine two different property investment approaches within one portfolio. The proposed strategic asset allocation would hold 45% in UK direct property exposures, 45% in global REITs and 10% in cash.
The investment team is led by fund managers Michael Barrie and Matt Jarvis, and the new structure will seek to maintain investor demand for access to a daily dealing property fund.
James Crossley, head of UK wholesale at Legal & General Investment Managers, said: “We believe that these suggested changes to the fund are in the best interest of investors and recommend that they vote in favour. As a property sector leader for over 16 years, we are well positioned to continue providing balanced property exposure to investors.”
The proposal to change the investment policy will be voted on at a shareholders’ meeting planned for 10 April 2024.
