Unusually high outflows

M&G suspends property fund amid Brexit and retail tensions

Haymarket 4

Edinburgh’s Haymarket, to the right in this artist’s impression of an earlier scheme, is part of M&G Real Estate

M&G has suspended trading in its M&G Property Portfolio fund amid Brext and retail tensions and what it describes as “unusually high outflows”.

The fund has shrunk from £3.1bn at the end of May to less than £2.6bn at the end of October and the cash element has plummeted from 17.5% to just 5%. Shares in the company were down 1.7% in mid-afternoon trade.

The fund manages a portfolio of 91 UK commercial properties in retail, industrial and office sectors.

M&G recently floated after being spun off from Prudential, said in a letter to investors that the suspension would enable it to restore cash levels by selling assets.

It said: “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.

“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.”

M&G said it will review the suspension on a monthly basis and in the meantime is waiving 30% of its annual charge, which will end when the fund resumes dealing. 

The fund has already seen the value of its retail assets cut by 7.7% because of evidence pointing to a decline.

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