• Wed. Feb 8th, 2023

Columbia Threadneedle suspends dealing in UK fund to restore liquidity – Reuters


Oct 11, 2022


Oct 13 (Reuters) – (This Oct. 12 story has been corrected to say 127 million pounds of outflows in paragraph 5 (not 147 million) and adds paragraph 6 to show 147 million pounds relates to outflow in last two weeks of February)

Investment manager Columbia Threadneedle said on Tuesday it had suspended dealing in the 453 million-pound ($503.51 million) CT UK Property Authorised Investment Fund and its feeder fund, as market stresses from a gilt and pensions crisis accelerated.

Income from the fund and its feeder fund, CT UK Property Authorised Trust, will continue to be paid while dealing in the fund is suspended, the company said in a news release.

Columbia Threadneedle’s other retail property funds remain open and are unaffected, it added.

Property funds and other more liquid assets are under pressure from UK pension funds that need to sell out to meet collateral calls on hedging positions following wild swings in gilt yields. read more

Property funds have seen 127 million pounds of outflows from UK-based investors in the two weeks to Oct. 7, according to funds network Calastone.

This is the largest property fund outflow since the last two weeks of February, when rising interest rates and Russia’s invasion of Ukraine prompted a net outflow of 147 million pounds, Calastone said.

The suspension of the Columbia Threadneedle fund, which is aimed at retail investors and is normally open for daily redemptions, follows a move to add restrictions to another Threadneedle fund aimed at institutional investors last week.

BlackRock Inc (BLK.N), CBRE and Schroders (SDR.L) also last week deferred payments in funds aimed at institutional investors. read more read more

Abrdn (ABDN.L), M&G and Canada Life said their property funds were trading normally.

“Contagion risk has been contained so far, but increasing redemption requests may cause some funds to make forced sales, pushing down asset values,” Fitch Ratings said in a note on Tuesday.

“This could lead to knock-on effects for other funds, through weaker returns, potentially triggering more widespread withdrawals.”

Property funds were suspended following the Brexit vote for Britain to leave the European Union in 2016 and after COVID-19 lockdowns in 2020, and have come under scrutiny from regulators for the mismatch between the length of time needed to sell property assets, and their structures which allow frequent withdrawals.

($1 = 0.8997 pound)

Reporting by Urvi Dugar in Bengaluru and Carolyn Cohn Elizabeth Howcroft and Kirstin Ridley in London
Editing by Matthew Lewis and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.

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