Legal & General Investment Management has removed the fair value pricing adjustment on its UK Property fund, which was introduced following the Brexit when significant redemptions threatened to hit remaining fund investors.
The £2.3bn fund held one of the largest cash cushions in the lead up to the UK’s referendum on the EU.
The removal of the fair value pricing mechanism will result in a 1.9 per cent positive difference at the fund level.
“Through careful management, we were able to meet all redemption requests and keep the Fund open for dealing throughout the post-referendum period. We achieved this without having to sell any assets at a discount,” an LGIM spokesperson said.
“We believe our careful preparation, liquidity management and fair pricing actions were in the best interests of our investors.”
The retail fund includes 100 UK commercial properties across retail, industrial and office sectors.
LGIM says it enacted an adjustment because valuers faced a lack of transactional evidence needed to value commercial property. It initially launched a 5 per cent adjustment and increased this to 15 per cent in early July.
“The UK property market has since stabilised, and we have recently seen a marked increase in the level of confidence from our valuers,” the spokesperson said.