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Columbia Threadneedle shifts property pricing to cap bid/offer volatility

Columbia Threadneedle shifts property pricing to cap bid/offer volatility

Columbia Threadneedle is to change the pricing of its main property funds to include transaction costs within its quoted bid/offer spread.

The firm’s £1.5 billion UK Property Authorised Investment fund (Threadneedle PAIF) and Threadneedle UK Property Authorised trust will be changing their pricing approach from 12 April.

The decision follows a similar move by Janus Henderson. While the spread will widen, the inclusion of all costs helps to dampen the volatility of switching between a bid/offer basis when the fund experiences sharp in or outflows.

Columbia Threadneedle head of wholsale Alastair Caw said: 'This new pricing structure aims to provide greater certainty for investors in terms of the associated buying and selling costs inherent in property funds.

'It ensures the full transactional costs of buying and selling the underlying assets will be borne equally by investors when entering and leaving the funds, in much the same way as if investors held the underlying assets directly.'

Threadneedle PAIF returned -3.6% over the past year, versus the sector average of 2.1%, while Threadneedle UK Property Authorised trust returned -3.7%.

Fitch Ratings recently warned that UK open-ended property funds face a worse crisis than the crash of mid-2016.

In October, the Financial Conduct Authority launched a consultation paper on open-ended funds investing in illiquid assets. The regulator said fund managers and independent valuers should move much quicker to suspend dealing, in the event of a Brexit-like rush on outflows.

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