Savers still trapped in £2.4bn M&G property fund

SAVERS with money in the M&G Property Portfolio have been locked out of their cash for at least another month.

The £ 2.4bn fund was suspended in December, as Brexitrelated uncertainty and the crisis blighting Britain’s high streets spurred many investors to try to pull their money out.

In a scenario which mirrored the crisis at Neil Woodford’s Equity Income fund, M&G managers were unable to offload its assets quickly enough to raise cash to pay back investors.

The Property Portfolio fund invests in commercial property such as shops, offices and warehouses, which are hard to sell in a hurry. Uncertainty in the market made it even harder.

Since the beginning of December, the fund’s managers have been scrambling to sell some properties. So far it has raised £70.4m from selling a retail park and office block in London.

Another £ 172.2m worth of buildings are either under offer or in solicitors’ hands.

Jack Daniels, the chief investment officer of M& G, said: ‘We’ve been encouraged by the support of many investors, who understand our decision to give the managers room and time to complete disposals at fair prices. While customers want ready access to their investments, it’s also important that their longterm interests are protected.’

Ryan Hughes, of fund shop AJ Bell, said: ‘With cash in the fund at just under 5pc at the end of December and a further 7pc of the fund under offer, the managers will want levels to be much higher before they reopen. They will be very conscious to ensure there is a sufficient cash buffer, as the last thing they want is to suspend the fund again.’

‘While other property funds have avoided succumbing to a similar fate, investors need to understand the liquidity risk they are taking when investing in assets that are hard to sell.’

The Financial Conduct Authority has brought in new rules for some funds which invest in illiquid assets, such as property funds.