Our Royal London Pension Property fund

6 December 2019
An investment update

We want to reassure you that we’re comfortable with the levels of liquidity within the Royal London Pension Property fund – the fund which provides the property exposure for our Governed Range. We’re doing all the monitoring and contingency planning you’d expect and, at this time, we have no plans to put any trade restrictions in place.

What’s happening in the property market?

Although some of our peers are facing increasing performance and liquidity challenges, our observation of the UK property market as a whole is that high quality properties are still very much in demand. Competition for the right assets remains strong and, as one of the largest property fund in the market, we are ready to react quickly to any opportunities that present themselves.

How is the Royal London Pension Property fund affected?

We continue to strongly believe in the value property can offer as a long term investment option, and as part of a well-diversified portfolio. We always maintain good levels of liquidity within our funds (about 20% cash at the moment, which is higher than usual), and we have thousands of new and existing customers investing money into our property fund every day (our fund has grown by £1bn since November 2018).

Why is the Royal London Property fund different to other property funds?

The dynamics in our property fund are uniquely determined by the fact that the majority of the fund is invested in through our core multi-asset investment proposition – the Governed Range. This means that the fund is not as sensitive to either individual or institutional investor sentiment.

Being one of the largest and fastest growing property funds on the market also means that we can use our inflows to adjust our exposure to sub-sectors where we expect performance to be strongest. We are not active buyers in the retail space and are using our funds growth to increase our weighting in other sub-sectors such as industrial units and last-mile distribution.

The performance of our fund has been particularly strong relative to our peers, as evidenced in the below comparison of our performance vs M&G Property Portfolio. Click the image to enlarge.

Source: Lipper, 05.12.2019.

Past performance is not a guide to the future. Prices can go down as well as up. Investment returns may fluctuate and are not guaranteed so you could get back less than the amount paid in.

What controls do you have in place to manage liquidity?

We pride ourselves on the robust and transparent governance process that is wrapped around our Governed Range. Minutes from our quarterly Investment Advisory Committee are available online and show that the liquidity of the property fund is a key topic for discussion at almost every meeting. On top of this, we apply daily liquidity monitoring and customer dynamic monitoring processes. We are also in close contact with the FCA in relation to the ongoing management and dynamics of this fund.

Next steps

For more information please contact your usual sales consultant.

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit royallondon.com.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.