Skip to main content
  • Register
  • Help
  • Contact us
  • Log out of your HL account
A A A

Legal & General Property - changes to fund pricing

Heather Ferguson | Fri 22 January 2016

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

In a world where fund management charges are generally getting cheaper, it is out of the norm for a group to announce an increase to their fees.

We therefore view the announcement of an increase to the Legal & General Property Fund's ongoing charges negatively. The ongoing charges for the fund have increased by 10-20% depending on the class of unit held:

Fund class Old fee New fee Difference
Legal & General UK
Property Trust 'R'
0.77%
(after 0.65%
saving is applied)
0.85%
(after 0.65%
saving is applied)
+10.4%
Legal & General UK
Property Trust Feeder 'R'
0.77%
(after 0.65%
saving is applied)
0.85%
(after 0.65%
saving is applied)
+10.4%
Legal & General UK
Property Trust 'I'
0.63% 0.75% +19%
Legal & General UK
Property Trust Feeder 'I'
0.63% 0.75% +19%

Legal & General argue the charges have not increased since the fund's launch in 2006 and as they now manage 112 properties and have a 107-strong real estate investment team, their costs have risen. However, over this time the fund has grown to over £2 billion in size and as the fee is received as a percentage, the monetary amount they collect has increased accordingly.

To their credit, the fund's managers, Michael Barrie and Matt Jarvis, have added value for investors and the fund has risen 40.4% since its launch, compared with 18.6% for the IA Property sector. The fund invests almost exclusively in physical commercial property but currently holds around 15% in cash, which acts as a drag on performance when prices are rising.

Register for free fund research by email

Our view on this fund

We do not feel unit trusts such as the Legal & General Property Fund are the most effective way to access the property market. They tend to receive large inflows when property prices are buoyant, and as it can take weeks to identify a suitable investment, and then a further few months to finalise the purchase, they often end up holding large levels of cash - therefore missing the gains in the market.

The same situation occurs in reverse when the property market is performing poorly - investors' request a return of their capital and the manager needs to sell properties to meet the redemptions. In falling markets it is often only possible to find buyers for the most attractive properties, leaving the most unattractive ones in the fund for the remaining investors. We remain cautious on property funds for these reasons, and see the increased changes as an additional negative for this particular fund. It therefore does not feature on the Wealth 150 list of our favourite funds across the major sectors.

Find out more about Legal & General UK Property Trust 'R' including how to invest

Please read the key features / key investor information document in addition to the information above.


Find out more about Legal & General UK Property Trust Feeder 'R' including how to invest

Please read the key features / key investor information document in addition to the information above.


Find out more about Legal & General UK Property Trust 'I' including how to invest

Please read the key features / key investor information document in addition to the information above.


Find out more about Legal & General UK Property Trust Feeder 'I' including how to invest

Please read the key features / key investor information document in addition to the information above.


Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


You may also be interested in: