Standard Life says outflows still negative but stable

Standard Life Investments, one of the UK fund managers which froze redemptions from its property funds in January, said the funds continue to register negative outflows but the situation seems to have stabilised over the past weeks. 'Outflows have eased but they are still negative,' Anne Breen, head of SLI's property research told PropertyEU.

The Edinburgh-based group said at end-January that it was imposing a six-month rolling suspension on investors taking money out of six UK unit-linked life and pension property funds in a bid to maintain liquidity and prevent forced asset sales in a falling market. The funds, which manage £2.7 bn of property assets, are the Property Fund, the Property Investment Life Fund, the Pooled Property Fund, the Property One Fund, the Pension Managed Property Fund and the Individual Property One Fund.

The redemption freeze was 'in the best interest of our shareholders', Breen said. 'If we had continued to give money back, we would have increased the risk exposure for the other investors.' Breen noted that the company was not the first and won't be the last to limit withdrawals. 'We expect more fund managers will lock their funds this year,' she said. 'In fact, we were able to manage the funds quite favourably because we anticipated the redemption wave in 2007 when we saw a peak in outflows in our property funds. As a result, we sold a significant amount of assets and, relatively, we are now holding up quite well.' As from January 26, the group has introduced a queuing system for surrenders, switches and transfers.

Breen said she did not know how much equity investors tried to take out in January but added it did not reach the level seen by Santander's Banif fund, whose redemptions accounted for 80% of the funds' value.

Most of the outflows were seen in SLI's retail funds as opposed to its funds for institutional investors, which continue to show resilience amid the crisis, according to Breen. 'Institutional investors realise that this is not the right time to take the money out and that they should wait to take advantage of the opportunities coming up in the market,' she says.

SLI has EUR 10 bn of property assets under management and runs a number of funds in the UK and Europe including the European Property Growth Fund which raised equity from 27 institutional investors across Europe.