Irish Life and Zurich restrict investors from cashing in property funds

Companies struggling with outflows as uncertainty over Covid-19 sparks withdrawals

‘Despite the strong performance of these funds we have continued to see more customers seeking to switch or encash than invest in the funds.’ Photograph: iStock

‘Despite the strong performance of these funds we have continued to see more customers seeking to switch or encash than invest in the funds.’ Photograph: iStock

 

Irish Life and Zurich Life have moved to restrict investors taking money out of flagship property funds after seeing a spike in client withdrawals amid economic uncertainty caused by Covid-19.

Meanwhile, Bank of Ireland’s New Ireland unit has been forced by outflows from its European property fund to lower the value of the portfolio by almost 8 per cent as it moved to price it on a “disposal basis”.

Irish Life has imposed a six-month notice period for investors to take money out of its Property Portfolio Fund, Property Modules Fund, Exempt Property Fund and UK Property Fund.

“Despite the strong performance of these funds we have continued to see more customers seeking to switch or encash than invest in the funds,” a spokesman for the company said. “In recent weeks, economic uncertainty arising from the Covid-19 virus has also created some market uncertainly around property valuations.”

Meanwhile, Zurich Life imposed a temporary suspension on withdrawals from its Zurich Property Fund from Friday. There is no specified time limit on this suspension, it informed brokers on Thursday.

Well-diversified fund

A spokesman for New Ireland said that while its European property fund had experienced strong inflows over the past few years and is a well-diversified fund invested in 58 properties across Europe, it had experienced outflows in line with other Irish property funds recently.

“In order to ensure equity between customers leaving the Fund and those remaining, we have taken the decision to change the pricing basis of the Fund from an ‘acquisition basis’ to a ‘disposal basis’. The impact of this change is that the value of units in the fund will fall by approximately 7.9 per cent.”

The moves come after Aviva decided in January to stop investors in two funds, its Aviva Irish Property Fund and Friends First Irish Commercial Property Fund, withdrawing their money for up to six months as they struggled with outflows.

A number of UK pensions and investment firms have also moved in recent days to impose restrictions on withdrawals as coronavirus takes its toll on global financial markets.