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Institutional funds

 

Most of this blog has been in respect of "retail" investment in its broadest sense, encompassing, in addition to what is traditionally regarded as "retail", defined contribution pension schemes and unit linked insurance products. Whilst old fashioned defined benefit pension shemes may be in long term decline, they remain important investors.

 

In John's 2012 report for Association of Real Estate Funds (AREF) "Unlisted funds - lessons from the crisis", details of which you can find here, he thought that the lessons learnt from the crisis would trigger a period of significant innovation in product development. The development of semi open-ended funds continues.

 

John represented the investors in the conversion of what is now Aberdeen Standard Investments Airport Industrial Property Unit Trust (AIPUT) from closed-ended to semi open-ended. This was one of the first funds to opt for a long-term structure with periodic liquidity events. It has now become a model for a number of others.  It is particularly attractive as model for long-term income yielding property such as industrial and residential.

 

In the current environment, with the asset types that are in vogue, it is not surprising that structures that allow the long-term deployment of capital are in fashion.

 

The development of new semi open-ended funds has shone a light on a number of areas of complexity that will be the focus of further debate over the next year. In particular, the pricing of subscriptions and redemptions is the subject of the AREF / INREV Open Ended Fund Pricing Project.

 

 

 

 

Update

 

We submitted a response to the FCA discussion paper on patient capital on 28th February. You can read it here.

We have been covering this project in our newsletters since AREF and INREV published their draft consultation document in November 2017. Following on from Phase 1, the project is now progressing to Phase 2 where the working group will be taking a closer look at the detailed operation and governance of fund pricing mechanisms. John is now part of the working group.

 

What next?

 

There are two areas that we will be focussing on over the rest of the year:

 

a)   As mentioned above, John is now part of the working group for the AREF / INREV Open Ended Fund Pricing Project. This is intended to reach its conclusions in the Autumn;

 

b)   At the IPF 30th Anniversay Symposium in London on 16th May 2018 John and Rob Martin, Director of Research at LGIM Real Assets, addressed the session "Illiquid assets in a world of electronic trading and platforms". You can read an article about it here. John will be producing further material on this topic over the next few months.

 

Anything that we produce on this will be covered in our regular newsletters. If you are not yet on the mailing list, you can register here.