M&G Investments (M&G) has temporarily suspended dealing in the shares of its M&G property portfolio and feeder fund with immediate effect, putting investors on high alert for copycat closures.
The UK-headquartered firm said that 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'.
The firm continued: '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.'
According to M&G, the funds will continue to be actively managed in suspension, but in recognition of customers’ inability to access their investment, M&G is waiving 30% of its annual charge, which will end when the funds resume dealing.
The firm said that suspension would be monitored daily, and that it would keep investors informed via the M&G website.
The suspension will allow the fund managers time to raise cash levels to pay redemptions, M&G told investors, whilst ensuring that asset sales are achieved at market prices and investors in the fund are safeguarded.
The decision to suspend was made by M&G Securities, the funds’ authorised corporate director, in agreement with the fund’s depositary, and the UK's Financial Conduct Authority (FCA) has been informed.
Orders placed after midday UK time on 4 December 2019 have not be accepted.
The M&G property portfolio is a broadly diversified fund which invests in 91 UK commercial properties across retail, industrial and office sectors on behalf of UK retail investors. The fund manages assets of £2.54 bn (€3 bn) as at 31 October 2019.
The move by M&A recalls the wave of fund suspensions in the wake of the Brexit vote in 2016, when seven UK property funds temporarily ceased trading to halt rapid outflows.
At the time, fund managers including Aviva Investors, Aberdeen, Henderson, M&G, Standard Life Investments and Columbia Threadneedle suspended dealings in the UK for up to six months, gating funds worth nearly £20 bn in total.
In May of this year, funds transaction network Calastone warned that UK property investors were once again pulling money out of real estate funds at accelerating rates.