AMP Capital has closed it NZ listed property fund citing flagging demand and rising proportionate in-product costs.
Launched in 2009, the actively-managed AMP Capital Listed Property Securities Fund has dwindled to just under $9 million under management spread across about a dozen clients – including a few platforms that house underlying retail investors.
Grant Hassell, AMP Capital NZ chief, said the local listed property fund was becoming uneconomic as the investor pool decreased.
“It’s been shrinking for a while and now the in-fund costs make it too expensive for investors,” Hassell said.
According to a client note, the AMP property fund, which invests only into NZX-listed real estate securities, has administration costs of 0.24 per cent compared to just 0.06-0.08 per cent for the three potential successor funds.
AMP Capital has offered the remaining investors in the shuttered fund the option of a free transfer to the group’s Global Property Fund, Australasian Property Index Fund, or the Australasian Property Shares Fund (operated by Mint Asset Management).
“Those unit holders who decide to either redeem their units in [Listed Property Securities Fund] for cash or switch their units to another fund [excluding the three free transfer options], will incur liquidation costs of around 0.10% which will be incorporated into the final redemption unit price for the Fund,” the client note says.
The Global Property Fund has total annual fees of 1.34 per cent (including underlying management fee of 1.25 per cent) compared to 1.03 per cent for the now-closed Listed Property Securities Fund.
At the other end of the scale, the $123 million Australasian Property Index Fund has a total annual fee of 0.42 per cent (0.35 per cent management fee).
Hassell said all three of the free-transfer funds offer a higher level of diversification across the asset class than the closing NZ product.
“There’s only 11 listed real estate securities in NZ,” he said. “Over time investors have shown a preference for more diversified products.”
Just over half of the Australasian Property Index Fund was invested in NZ real estate securities, Hassell said, giving local clients exposure to their home market if required.
The NZ listed property fund officially shut for business on July 12 with a deadline of October 12 set for client transfer instructions.
“If no instruction has been received by close of business 12 October 2018, the unit holders’ units will be redeemed and the proceeds will be paid into their nominated bank account around 17 October 2018,” the client note says.