M&G Investments has temporarily suspended dealing on its property portfolio due to “unusually high and sustained” outflows.
These redemptions coincide with continued Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector, according to the firm. As a consequence, it has struggled to sell commercial property.
In a statement, M&G said the suspension was in the best interests of its property portfolio’s clients, and that it would continue to be actively managed in the meantime.
The firm is waiving 30% of its annual charge in recognition of customers’ inability to access their investment.
The suspension of the £2.5 billion (€2.95 billion) fund will allow managers time to raise cash levels to pay for the redemptions whilst ensuring that asset sales are achieved at market prices, according to the firm.
The gating will be regularly reviewed, with updates being posted on M&G’s website.
Adrian Lowcock, head of personal investing at financial intermediary Willis Owen, said: “This will, once again, raise the question of whether illiquid assets should be held in an open-ended structure.”
“The open-ended structure simply does not work if the investors in it do not share the same long-term perspective. This should serve as a reminder to investors to only consider open-ended property funds if they are unlikely to need access to their money quickly.”
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