New Ireland is keeping its property funds under review following the recent pricing changes to "sell" basis introduced by a number of investment managers. Friends First, Hibernian Life and Pensions and Irish Life have changed their property fund pricing from a "buy" to a "sell" basis. Canada Life has no plans to change.

The investment managers who have made the change have reacted to greater than normal outflows from their funds - outflows greater than inflows - and moved to protect the interests of the investors remaining within the fund.

When a fund is priced on a buy or acquisition basis, the costs of acquiring the property - stamp duty, legal and other costs - are included in the price of the property units along with the market cost of the property.

But pricing on a sell basis excludes these costs and is based on the market value of the property only. So even where the value of the property has not changed, moving from a buy to a sell basis will result in a significant drop in the unit fund price, or what the selling investor will get. The change has resulted in markdowns in the underlying prices of property fund units of 12 per cent at Friends First, 10 per cent at Hibernian and 7 per cent at Irish Life.

After a very strong run in recent years, property funds are now expected to settle back to more normal returns. Investors who are more bearish about the outlook for property have decided to sell now to take their profits.

Funds that have had large single premium inflows in the last two years are the ones expected to come under the greatest pressure now as shorter-term investors move to lock in profits.