We are writing to inform you of an announcement yesterday relating to one of the funds we hold across our discretionary portfolios. M&G announced the temporary suspension of trading within its Commercial Property fund. We invest within the fund in order to provide competitive income streams and act as a diversifier to our core equity and fixed interest exposure.
The fund has been closed primarily due to outflows from the fund over the course of the year reflecting general Brexit uncertainty and in particular weakness within the retail sector. We would highlight that whilst the fund does have some exposure to the retail sector, the largest exposure remains within offices, warehouses and industrial units. Direct property funds always face a challenge of managing liquidity given the timescales of property transactions and have the ability to defer withdrawals, if required. The fund will continue to distribute income payments as normal and will continue with daily valuations. In addition, M&G have confirmed that they will reduce their management fee by 30% during the suspension period.
The trading suspension will remain in place to allow M&G to complete property transactions and increase cash levels within the fund and will be reviewed in 28 days’ time. Our exposure to the M&G fund within our models ranges from 3-5% and therefore we do not have any significant exposure. We can continue to manage portfolios as normal and facilitate any standard withdrawal requests although the fund would be temporarily retained for total disposal requests.
We will continue to monitor the situation and keep you informed of any developments and await the outcome of next week’s election to hopefully bring some certainty to matters generally.
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