M&G suspends property fund
ONE of Britain’s biggest commercial property funds is banning withdrawals after a surge of investor requests to cash out due to Brexit uncertainty and the retail downturn.
M&G Investments suspended dealing in its £2.5billion M&G Property Portfolio following “unusually high and sustained outflows” in recent months.
The FTSE 100 firm cited “continued Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector, which has made it difficult for us to sell commercial property”.
It added: “Given these circumstances, we have now reached a point where M&G believes it will best protect the interests of the Funds’ customers by applying a temporary suspension in dealing.”
The funds will continue to be actively managed in suspension, with M&G waiving 30 per cent of its annual charge until dealing resumes.
The suspension will allow the fund managers time to raise cash levels to pay redemptions. Customers will continue to receive income payments.
The M&G Property Portfolio has invested in 91 UK commercial properties across retail, industrial and office sectors. It was previously suspended for four months in 2016 after the UK’s EU referendum. Industry tracker Morningstar said in October that about £750 million was drawn out of M&G’s property portfolio during the first eight months of 2019.
A spokesperson for the Financial Conduct Authority said: “The decision to suspend was made by the fund’s Authorised Corporate Director, in conjunction with the Depositary. This is to allow the fund time to raise liquidity levels and preserve value for investors through orderly asset sales. The FCA is working closely with the firms involved to ensure that timely actions are undertaken in the best interests of all the fund’s investors.”
Patrick Connolly, chartered financial planner at Chase de Vere, said: “While the M&G fund is suspended, most other providers have far greater liquidity, and less exposure to retail properties, and so are better placed to meet redemptions, as long as there isn’t a mad rush to the exit door.
“Property remains an asset class which can play an important role in investment portfolios and, when we have some real clarity on Brexit, the prospects for this asset class will hopefully improve.”