LGIM shareholders approve property fund rejig

Shareholders have approved Legal & General Investment Management’s proposals to switch its circa £1.2bn property fund strategy to a hybrid model. Following the vote, which took place today, LGIM will adopt a “blended” approach to the L&G UK Property Fund (PAIF) and its feeder fund that will combine exposure to direct UK real estate with indirect exposure through holdings in global REITs. As such, the fund’s direct property allocation will shrink to 45%, from circa 80%. Along with this, 45% will be allocated to global REITs. The remaining 10% will be held in cash. The transition process will begin on 12 April. The fund names will be changed to L&G Property Fund and L&G Property Feeder Fund. The L&G PAIF management team is led by fund managers Michael Barrie and Matt Jarvis, while the funds’ exposure to global REITs is delivered by LGIM’s Index Solutions team. James Crossley, head of UK wholesale at LGIM, said its new strategy would allow it to “increase low-cost, global, liquidity exposure within the fund, access new markets, and respond to investors’ need for daily dealing”. Crossley added: “The hybrid property approach is a blended strategy and market-leading solution; balancing the wants, needs and infrastructure capabilities of the advised retail investor market, together with the regulatory backdrop. We wholeheartedly believe this solution is in the best interest of investors, and as a sector leader for over 18 years, we are well positioned to continue enabling investors’ access to balanced property exposure.” Jarvis said: “Today is a huge milestone for the L&G Property Fund and hybrid property fund strategies. We have listened to our clients and look forward to progressing this exciting new solution for existing and prospective investors. Having raised liquidity, the cash level in the fund is currently in a strong position, allowing us to confidently and formally begin the transition process. “A combination of asset sales and further new investment will accelerate the transition – and, as an immediate step, in addition to the reduction in fees, the fund continues to operate on a reduced spread basis. “Our thematic portfolio continues to provide access to direct UK property, with assets in strong locations across a range of sectors with structural growth potential – such as industrial and self-storage, operational hotels, and build to rent residential. We continue to view the property sector as an attractive diversifier in any balanced portfolio, and believe it is well positioned for investors with long-term horizons.”