M&G suspends £2.5bn property fund on Brexit and retail woes

Pressure of investors seeking money back exceeded speed at which fund could sell properties

M&G is a listed asset manager. Photograph: iStock

M&G is a listed asset manager. Photograph: iStock

 

Fund manager M&G has halted trading in its £2.5 billion (€2.9 billion) property fund after fears over Brexit and a retail downturn prompted investors to rush to pull out their money, echoing the crisis in the sector following the EU referendum.

The M&G Property Portfolio is the latest open-ended product to suspend withdrawals after the crisis at Neil Woodford’s company this year, and the first in the property sector since a series of large funds were forced to “gate” following the 2016 Brexit vote.

M&G, a London-listed asset manager, said the pressure of investors demanding their money back had exceeded the speed at which it could sell properties, leading it to suspend any redemption requests made after midday on Wednesday.

“In recent months, unusually high and sustained outflows from the M&G Property Portfolio have coincided with a period where continued Brexit-related political uncertainty and ongoing structural shifts in the UK retail sector have made it difficult for us to sell commercial property,” it said.

Circumstances

“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.”

Jason Hollands, managing director at the online investment service Bestinvest, said there was a risk of contagion across the sector.

“As we saw in 2016, when one fund acts, this can risk inadvertently triggering increased selling across the asset class from investors worried about being locked in to other funds,” he said. – Copyright The Financial Times Limited 2019