Property funds move to reassure investors over M&G contagion fears
Managers of rival property funds are rushing to reassure investors their investment vehicles will remain open following the suspension of M&G’s £2.5bn property fund on Wednesday.
M&G was forced to gate its Property Portfolio after managers did not have enough cash to meet a spike in withdrawal requests, sparking concerns that other property funds could follow suit.
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Investors pulled a net £577m out of the fund in the six months to the end of October, making it the fund that shed the most during the period, according to Morningstar data.
Aberdeen Standard’s Aberdeen UK Property Fund experienced the second highest net outflows at £371m, while Columbia Threadneedle’s UK Property Authorised Investment fund came in third with £303m net outflows.
The Aberdeen fund had 14.6 per cent cash at the end of November, while its Threadneedle counterpart currently has a cash holding of around 10 per cent, the firms said.
“The intention is to maintain this risk-off stance until we have greater clarity on the outlook for the UK economy in the context of Brexit and the upcoming general election,” an Aberdeen Standard spokesperson told City PM
“We will continue to monitor the situation closely and in particular any impact M&G’s decision has on investor sentiment towards the sector,” they added.
Read more: M&G suspends trading in £2.5bn property fund over Brexit fears
“Prudent liquidity management has always remained key to our investment philosophy,” said a Columbia Threadneedle spokesperson.
“The Fund’s cash levels are maintained within a liquidity corridor of five to 15 per cent and year to date we have comfortably met all client redemption requests.”