Investors trapped in suspended open-ended property funds have paid out more than £40m in management fees over the course of 2020, with some still paying fees in 2021 as £2.8bn of investor capital remains locked away across three funds.
Aegon, Aviva, M&G and Janus Henderson Investments all remained shuttered into 2021, with only the latter having reopened so far this year.
All of the still-suspended funds cite the need to achieve an acceptable liquidity level, raising cash buffers to meet potential redemptions when they reopen.
According to the latest factsheets, Aegon holds a cash level of 17.1%, Aviva 22.4% and M&G 21.2%.
The widespread suspension prompted the Financial Conduct Authority (FCA) to initiate a consultation on the future of the open-ended property market, with Christopher Woolard, interim chief executive of the FCA at the time, suggesting the two recent mass suspensions demonstrated the "difficulty for these funds of maintaining a promise of daily liquidity to investors when their assets are inherently illiquid".
On 3 August 2020, the FCA consultation proposed investors seeking to withdraw their investments from these funds should be subject to a notice period of 90 to 180 days, which it argued would enable mangers to "plan sales of property assets so that it could meet redemptions as they fall due" and hold "less cash than they do currently".
Some in the industry responded negatively. Charles Incledon, client director at Bowmore Asset Management, suggested these "draconian" proposals would make investors "far less enthusiastic" about the funds and questioned whether the notice period would make the funds ineligible for ISAs.
However, Marc Haynes, head of institutional business, EMEA, at Cohen & Steers, argued the proposals were "overdue" and could repair "some of the reputational damage caused by the wave of lock-ups we have seen over many years".
The consultation is ongoing.