M&G’s flagship bond fund faces £100m daily outflows
M&G’s flagship bond has become the latest casualty of the coronavirus-induced market sell-off, as investors pull £100m a day from the fund.
Investors have pulled £2.5bn from M&G Optimal Income since mid-February, according to the Financial Times, as the coronavirus outbreak pushed investors towards the safety of cash.
M&G, which is run by Richard Woolnough, one of Europe’s best-paid fund managers, suffered performance losses of about 15 per cent between 19 February, when US markets hit an all-time high, and 25 March.
UK bond funds have been worst hit by the coronavirus crisis, shedding £4.4bn in the month to date, as investors flock towards cash.
Sign up to City PM’s Midday Update newsletter, delivered to your inbox every lunchtime
As bond prices were pushed down and dollar liquidity squeezed money markets were unable to function normally for a time, leaving investors with little option but to go to cash.
The fund now stands at about £16bn, according to the FTfm, compared with £21bn just five weeks earlier. It piles further pressure on M&G which broke away from parent company Prudential and has lost a third of its stock since floating in October.
In December, M&G’s open-ended property fund became the first to suspend trading since the Brexit referendum, after a record number of redemption requests.
This month seven more firms suspended property funds after independent valuers introduced material valuation uncertainty clauses due to the pandemic.
L&G followed Aviva Investors in gating its fund after their independent valuer Knight Frank introduced an uncertainty clause. CBRE’s clause also triggered the suspension of Columbria Threadneedle, Janus Henderson and Kames Capital’s funds.
Shares in M&G are down 6.61 per cent.