Almost £300m was wiped off the value of two of Britain’s biggest property funds yesterday when New Star and Norwich Union reduced the price at which units can be encashed. Financial Times. Daily Telegraph
Both funds have suffered a net withdrawal in the past couple of days, prompting them to switch from ‘offer’ to ‘bid’ pricing.
Investors wanting to sell units in New Star’s £2bn-plus UK Property Unit Trust will receive 3.9% less than previously. The £4.4bn Norwich Union Property Trust reduction is 4.7%.
Both companies insisted there is no reason to panic, but the sudden reversal in fortunes at what had been top-performing unit trusts will come as a shock to many recent investors.
A director of New Star said: “The actual value of the underlying properties has not changed but we have changed the basis on which units are priced to reflect net redemptions and to be fair to all investors.”
A spokesman at Norwich said: “This is perfectly normal and there is no need for alarm.”