M&G suspends property fund citing Brexit, weak retail sector

Heavyweight investor M&G on Wednesday suspended withdrawals from its property fund, citing Brexit worries and a weakening retail sector which had sparked a run by investors.

The company said it had been unable to cope with demands from investors for their money to be returned and was suspending its £2.5bn M&G Property Portfolio, which owns office buildings and shopping centres.

"In recent months, continued Brexit-related uncertainty and ongoing structural shifts in the UK retail sector have prompted unusually high outflows from our property fund for retail investors," M&G said in a statement.

"Given that these circumstances and deteriorating market conditions have significantly impacted our ability to sell commercial property, we have temporarily suspended dealing in the interests of protecting our customers.

The assets owned by the M&G Property Portfolio...are held for the long term and take time to buy and sell, making it difficult to immediately meet sudden and sustained levels of redemptions. Suspending the funds at this time will allow the fund managers...time to restore the cash levels by selling assets in an orderly manner and preserve value for our investors."

M&G said it had notified the Financial Conduct Authority but could not say how long the fund would be suspended for.

"The funds will still be actively managed during suspension, but we understand that being unable to deal in the funds is very frustrating for our customers," M&G said, adding that it would waive 30% of its annual charge until the suspension was lifted.

The company demerged last month from its former parent Prudential. The fund has shrunk by £1.1bn so far this year.