Market history · Real estate ·
A £2.5 billion UK property fund suspends dealing
On 4 December 2019 M&G Investments suspended dealing in its M&G Property Portfolio and its feeder fund. The fund held about £2.5 billion at the end of October, down from about £3.5 billion at the start of the year, Trustnet reported. M&G cited unusually high and sustained outflows, which it linked to Brexit uncertainty and the changes affecting the UK high street.
Open-ended property funds let investors buy and sell units at regular intervals, but the buildings they own can take months to sell. When more investors want to leave than the fund can pay from its cash, a manager can suspend dealing so that it does not have to sell property in a hurry at poor prices. That protects those who remain, and stops those who want to leave from doing so.
Portfolio Adviser noted that the suspension brought fresh scrutiny of rules on daily-dealing funds that hold illiquid assets.
The takeaway
Daily dealing and slow-to-sell assets do not fit together easily. The gap is bridged by cash, and when the cash runs out, by suspension.
Sources
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