Open-Ended Real Estate Funds Under The Spotlight
15
Sep
2020
Open-ended real estate funds have faced criticism of late and in the past for suspending redemption requests. However, due to the heterogeneous nature of the underlying fund assets and the physical time taken to sell assets, by their nature, these funds will behave differently in times of stress to most funds investing in more liquid assets, such as listed securities. In more stable markets, the funds offer daily liquidity and have attracted substantial in-flows and investors value the generally stable real estate returns along with the diversification benefits provided by the asset class. Furthermore, these types of funds have been in existence in some shape or form globally since the early 1970s. Questions have been raised whether the structure should be changed to reflect the underlying assets illiquidity. The expert panel will explore the issues surrounding the funds and examine the pros and cons of the current structure and alternatives. The panel will also consider the forthcoming FCA consultation findings on open-ended funds.