Royal London Asset Management’s (RLAM) property fund has failed to make the grade in its latest assessment of value (AoV) report.
Royal London Property was one of only two funds to receive a ‘red’ rating for performance, meaning follow-on actions are required.
The fund is in the top quartile of the sparsely populated IA UK Direct Property sector over one and three years, according to data from Trustnet, and has delivered above average performance on a five-year view.
Like most funds in the sector, Royal London Property was forced to suspend during the pandemic after it became impossible to value its underlying holdings. But since re-opening in October 2020, it has seen assets grow from £385.5m to £486.3m at the end of June.
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However, Royal London’s fund board concluded the fund’s A and B share classes and its feeder fund, the Property Trust, had “significantly underperformed” when benchmarking against the AREF/IPD UK Pooled Property Fund Index over a seven-year period.
But it added there is evidence changes made over the past two years “are now yielding results,” leading to improved returns over the past year.
Within that period, a new manager, Stephanie Hacking, has been appointed, structural changes have been made to the portfolio and RLAM has added resources to the property team.
Hacking has 41.5% of the portfolio invested in UK industrials, one fifth in West End offices and 8.3% in retail warehouses, according to the fund’s latest factsheet. She also has 8.2% in cash.
| 1y | 3y | 5y | |
| Royal London Property | 19.1 | 22.1 | 28.7 |
| IA UK Direct Property | 11.0 | 9.6 | 18.5 |
Source: Trustnet
GMAP funds fumble
RLAM’s Global Multi Asset Portfolios (GMAP) also came under fire in the AoV report. Four funds in the six strong range, managed by Trevor Greetham, scored an ‘amber’ rating for performance, while GMAP Dynamic was given a ‘red’ score.
The £395.1m GMAP Conservative fund, which sits in the IA Sterling Strategic Bond sector, was the only vehicle to pass with flying colours for performance, service and cost – the three key areas assessed by the fund board.
While performance in the six years since the funds were launched has been shaky, the board said “a clear improvement trend is now evident,” following strategic asset allocation calls made in early 2021, including reducing exposure to UK property and stocks and upping holdings in global equities.
Four other funds were given an ‘amber’ rating for questionable performance over the long-term, including the Multi-Asset Strategies fund, which does not have a five-year track record, and the UK Opportunities fund. Having reviewed the situation, the board it would monitor the funds, but no further action was required.
The Short Term Fixed Income fund and Short Term Fixed Income Enhanced fund were also flagged for failing to deliver higher returns than cash over the past 12 months. However, the board said this outcome was “expected” due to the funds having a certain degree of interest rate risk from holding covered bonds and floating rate notes with longer maturities.
