We've introduced a 180-day delay period for customers wishing to redeem or switch investments from the Scottish Widows Life Property Fund and the Scottish Widows Pension Property Fund. This came into effect on 21 January 2008.
Investor attitude towards property has gradually deteriorated over 2007 and has been made worse by the recent credit crunch. This has led many investors to pull out of the asset class, despite property fundamentals remaining strong and the sector's continuing appeal as a longer-term investment.
As investors switch away from property funds, there comes a point where the funds have too little cash to meet short-term demand (i.e. requests to switch or withdraw). As we know, selling a fund's property assets can raise cash but this process takes time and in the current market environment it can be challenging to sell at fair value. If we sell properties at discounted prices it isn't fair to policyholders remaining in the funds.
By setting the 180-day delay period, we aim to implement an orderly programme of sales over a longer period. The goal is to provide liquidity for those who want to leave the fund while protecting the fund's performance for longer-term investors.
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