The Janus Henderson UK Property PAIF and its associated Feeder Fund are dual priced funds. Investors should be aware that at times when the direction of net flows shifts there may be some volatility around the pricing basis until a clear trend is established.
What is dual pricing?
There are two methodologies for calculating the value of a direct property fund’s assets: bid basis and offer basis. The valuation is calculated using both methodologies every day. The pricing of shares in direct property funds must be based on one or other of these methodologies. The appropriate methodology to use for pricing of shares in the fund is dictated by the direction of net client flows. When a fund is experiencing inflows and therefore acquiring additional properties, the ‘offer’ calculation basis is used (the pricing is higher to reflect the additional expenses associated with property purchases, such as stamp duty land tax). When a fund is experiencing a trend of outflows and the property portfolio is stable or selling assets the ‘bid’ calculation is used. A change in pricing is not a reflection of the fund managers’ views on the prospects of the asset class or of the level of liquidity in the fund, but purely based on the expected trend of net client flows.
It is industry practice to switch between the two pricing bases with the approximately 5% gap between the two considered the fairest means of ensuring existing investors in the fund, new investors and sellers of the fund receive the most appropriate price. Please refer to the Janus Henderson guide to fund pricing for more information on the nature of dual pricing.
Changes in pricing basis
When there is a change in the expected direction of net client flow, the calculation basis used for pricing shares in the fund changes accordingly. On each occasion the quoted price of shares changes by around 4.5% compared to the quoted price on the previous day. As with any large fund, the Janus Henderson UK Property PAIF and its associated Feeder Fund experience significant gross daily client flows in both directions.
The pricing basis of the fund remains under continuous review and will be appropriately managed to reflect the outlook for fund flows. It is possible that some volatility in the quoted pricing basis of the fund may occur although it is hoped to keep this to a minimum.