Expat investors concerned over property fund suspension

Published:  31 Dec at 6 PM
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Expat investors are showing concern over the recent suspension of the M&G Property Portfolio fund.

Following a surprise block on expat investors attempting to withdraw from the troubled fund, financial giant Prudential locked the entire £164 million portfolio, with a spokesperson stating the company had been lowering its exposure to British property across the board since January last year. He added that, early last year, charges were reduced and the objectives of the fund were altered, allowing sales of property in order to ensure the fund itself met the expectations of its clients.

At the same time, Aberdeen Standard Investments is debating a reshuffle of funds totalling some £1.4 billion at present invested in British commercial and retail property. The move is purported to demonstrate whether a shift to a more diversified asset base than stores and single unit shops would be of benefit to clients. Some 40 per cent of ASI’s Aberdeen UK fund is dependent on the fortunes of the retail sector at a time when non-discretionary spending is declining fast and the retail sector as a whole is being replaced by online shopping.

As regards the M&G Property Fund’s present position, it’s still running although investors are barred from withdrawing their cash until later in January at the earliest, dependent on a 28-day review. Over 2019, its investors have already reclaimed £1.1 billion, with fund managers citing Brexit anxiety as well as the increasing number of retailers giving up the fight and closing down.

In addition and following investor concerns, the UK’s largest property fund has admitted it’s keeping between a fifth and a quarter of the fund’s value in cash in order to guard against a run of investor withdrawals. As a result, Legal and General’s £3.2 billion UK Property fund now has a war chest totalling some £650 billion although funds available for investment are now depleted. According to a source, managers now have scope to settle withdrawals without being forced to sell properties at bargain prices.
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