M&G extends suspension of stricken property fund

M&G Investments' stricken property fund will remain suspended as it continues selling off assets to boost cash levels.

The £2.3bn M&G Property Portfolio was temporarily suspended on 4 December after a run of investor redemptions, which the investment firm attributed to uncertainty around Brexit and “structural shifts in the UK retail sector”.

M&G confirmed that since then, the fund’s managers had agreed to sell £70.4m of assets, with another £172.2m either under offer or with solicitors.

But it said it wanted to continue raising cash, and as such had decided to maintain the suspension. It did not say until when.

Ryan Hughes, head of active portfolios at AJ Bell, said: “With cash in the fund at just under 5% at the end of December, and further 7% of the fund currently under offer, the portfolio managers will want levels to be much higher before they are in apposition to re-open. They will be very conscious to ensure there is a sufficient cash buffer before the re-opening, as the last thing they want is for the fund to have to suspend again if redemptions accelerate.”

Jack Daniels, chief investment officer at M&G, said the firm had the support of “many investors” in the fund.

“While customers want ready access to their investments, it’s also important that their long-term interests are protected,” he argued. “Historically we have held a low cash buffer in the conviction that our customers pay us to invest their money, not keep it idle, particularly in times of near-zero cash interest rates.”

As at December 31, cash held by the fund was 4.8%.

M&G is waiving 30% of the annual charge for the fund, “in recognition of the inconvenience caused to investors”.