Changes to our Property fund
On 1 October 2015, we’re making changes to broaden the types of investments the Property fund can hold. This affects both the pension and life funds.22 September 2016
From 1 October:
- The fund will have the ability to invest up to 15% in indirect property
- The additional yearly charge for the fund will increase from 0.40% to 0.55% due to the higher costs of accessing some of these indirect property investments
- The fund’s benchmark will change to Association of British Insurers (ABI) UK Direct Property Sector median
Changes in detail (from the 1 October 2015)
|Current fund description||New fund description (from 1 October 2015)|
|The fund aims to maximise returns through capital and rental growth and outperform its benchmark (IPD UK All Property Monthly Index) by 0.5% a year over a rolling three-year period. It invests directly in UK office, retail and industrial property and may, from time to time, hold a significant amount in cash.||The fund aims to maximise returns through capital and rental growth and outperform the ABI UK Direct Property sector median over a rolling three-year period. It can invest directly in UK office, retail and industrial property and can invest up to 15% in property related equities (shares). The fund may, from time to time, hold a significant amount in cash.|
|Current benchmark||New benchmark|
|IPD UK All Property Monthly Index||ABI UK Direct Property sector median|
|Current risk rating||Risk rating after 1 October|
|Below Average*||Below Average*|
|Current additional yearly charge||New additional yearly charge|
* We give a risk rating based on each fund’s sector and characteristics – including its objectives and investment style. This shouldn’t be compared to other companies’ risk ratings, which may be based on different criteria.
For further information about the changes we’re making, please see below.
We’re making these changes with the aim of improving the long-term performance of the fund but, as with all investments, there’s no guarantee of this and there’s still a chance you may get back less than you invested.
Our Property fund currently invests in direct property holdings (physical property) and has been reducing in size over time. This has meant that we’ve had to sell some properties and hold more cash to meet the needs of customers who want to move their money.
In order to drive investment performance, improve liquidity (the ease at which assets can be bought and sold), and better manage investment risk through a more diversified portfolio, we’re broadening the type of investments the fund can hold. This includes some indirect property assets such as investment in other property funds and property related equities (shares) like Real Estate Investment Trusts (REITs) which are easier to buy and sell than direct property holdings.
The additional yearly charge you pay will increase from 0.40% to 0.55% to reflect the higher cost of holding indirect property investments. The fund manager believes that the inclusion of indirect property will help improve performance, but of course there’s no guarantee of this and there’s still a chance you may get back less than you invested.
The Property fund remains the lowest price fund of its type available in Aegon’s range and remains very competitively priced compared with other Property funds.
The fund will have the ability to invest in other property funds managed by Kames Capital and other fund managers, which use a number of investment types to access property markets in a variety of ways to create a more diversified portfolio.
These other funds have higher annual charges, although we’ve negotiated preferential rates to keep costs as low as possible. We believe the Property fund still offers excellent value and it remains the lowest priced property fund in our range.
If you’re happy to stay invested in the Property fund, you don’t have to do anything. The changes will happen automatically from 1 October 2015.
If you feel this fund is no longer suitable for you, you can switch your existing investment and redirect any future investment, free of any switch charge, into an alternative fund or funds of your choice. If you want to do this, please complete a switch form and return it to us as soon as possible. You will not be charged for any switch.
You may wish to speak to a financial adviser if you have any further questions.
Indirect property investment refers to any property investment which isn’t directly in physical buildings (often referred to as ‘bricks and mortar’) like offices, houses, retail outlets etc. For example, investing in shares of property related companies or investing in other property funds which hold physical buildings.
A REIT is a business that buys and manages income producing properties or mortgages on income producing properties, and pays a proportion of that income as a dividend. REITs can invest in a variety of property types including commercial, industrial, and residential.