- M&G announces closure of its M&G Property Portfolio fund
- Assets under management stand at just £565 million today
- This compares to £2.5 billion in assets when the fund first suspended in 2019
Ryan Hughes, head of investment partnerships at AJ Bell, comments on news that M&G is set to close its M&G Property Portfolio fund:
“The writing has been on the wall for open-ended property funds ever since they suspended again in the depths of the Covid crisis. That triggered funds in the sector to begin closing down given the evident problems with liquidity that resulted in a fundamental mismatch in the demands of investors against the liquidity of the underlying assets. Offering a daily dealing structure for an asset that can take months to sell was an accident that happened all too often and one that ultimately undermined investor confidence. The FCA looked to address the issue through tentative proposals to limit access but while this was a potential solution, the likelihood was always that retail investors would want the comfort blanket of daily dealing even if they didn’t need to access the asset.
“The suspension of the M&G Property Portfolio fund is not a surprise given the uncertainty hanging over open-ended funds ever since the FCA announced its review, with assets coming out of the sector as investors looked to get ahead of any further announcements. The fund is widely owned by retail investors and they will now enter a frustrating period of having to wait for the assets to be sold.
“Indications from M&G are this process may take up to 18 months, although the challenge will be to sell at a sensible price while not rushing either. However, any potential buyer will now be in pole position in the knowledge that M&G are looking to offload over £500 million of property assets into a market that is not exactly buoyant at the moment. As a result, I suspect investors will have to be very patient to see the full realisation of their capital.”