M&G has temporarily suspended trading on its £2.5bn Property Portfolio fund after it was hit by “unusually high and sustained” investor outflows.
The asset manager said that high levels of investor redemptions had come at a time when continued Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector had made it difficult to sell commercial property.
The fund’s suspension, which is aimed at raising cash levels in order to meet investor redemptions, will be regularly reviewed. The fund had just under 5 per cent of assets in cash or equivalents at the end of October, with money invested across 91 properties.
M&G added that it would waive 30 per cent of the fund’s annual charge for the duration of the suspension in recognition of customers’ inability to access their investment.
“In all other aspects, the fund will continue to operate as normal throughout the suspension and customers will continue to receive income payments,” a spokesman said.
The gating is reminiscent of the time several open-ended property funds suspended trading in the wake of 2016’s Brexit vote as investors scrambled to withdraw their money. Investment Association figures show that funds in its UK Direct Property sector have been hit by net retail outflows of nearly £1.3bn in the first nine months of 2019.
The M&G fund, which was among those to suspend trading in 2016, has also struggled in terms of recent performance. It made a 7.8 per cent loss in the last year, and sits at the bottom of its sector in performance terms over this period and the last three years.