UK’s M&G suspends flagship property fund on Brexit worries
Britain’s top property investment funds have shed almost 10% of their combined assets in 2019
London — British fund firm M&G Investments has suspended dealing in its flagship UK property fund, blaming Brexit uncertainty for a surge in investor requests to cash out.
Unusually high and sustained outflows from the £2.5bn M&G property portfolio have coincided with a period of continued Brexit-related political uncertainty, M&G said on Wednesday.
The fund firm also said ongoing structural shifts in Britain’s retail sector have made it difficult for it to sell some of its largest assets.
“Given these circumstances, we have now reached a point where M&G believes it will best protect the interests of the fund’s customers by applying a temporary suspension in dealing,” it said. The fund will continue to be actively managed in suspension, M&G said, adding it would waive 30% of its annual charge until dealing resumes.
The temporary suspension will allow the fund managers time to raise cash levels to pay redemptions, while ensuring that asset sales are achieved at market prices and investors in the fund are safeguarded, M&G said.
Britain’s top property investment funds have shed almost 10% of their combined assets in 2019 as investors fret about the impact of Britain’s exit from the EU.
Fund industry tracker Morningstar showed each of the 10 biggest open-ended property funds shed assets between January and August 2019 as investors pulled cash from the sector. The M&G property fund was the worst hit, with net outflows of more than £750m.
Other funds that saw significant outflows at that time include Aberdeen UK Property and Janus Henderson UK Property.
News of the suspension comes a month after Britain’s Financial Conduct Authority (FCA) said asset managers have “a central duty” to ensure effective liquidity management of their funds.
Commenting on the fund suspension, the FCA said it is working with M&G, the fund’s corporate director and its depositary “to ensure that timely actions are undertaken in the best interests of all the fund’s investors”.
The FCA has opened an investigation into the suspension in June of the now-closed equity fund run by Neil Woodford, one of Britain’s highest-profile asset managers.