The average UK commercial property fund is down 11.4% on its level five years ago, testament to the impact of the credit crunch on this sector.
The best performer of the 42 funds in the Investment Management Association's property sector was up 1% over five years, as of 10 December 2012, while the worst performer was down 26.6%.
These were the funds lucky enough to survive the financial crisis. A number of commercial property funds had to either close or halt withdrawals as prices sunk.
Castle Trust, a mortgage lender that offers investment vehicles targeting residential property, produced the research among 375 financial advisers.
“Property funds are not as liquid as they may seem,” says chief executive, Sean Oldfield. “The reality is that investors try to sell when prices turn down, at which point they are locked in and then get the prices that can be achieved for the properties when allowed out. The idea that an open-ended fund can make illiquid assets liquid is misleading, as anyone who tried to sell a holding in a commercial property fund in 2008 will be aware.”
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