M&G has confirmed that its Property Fund will remain suspended as it continues the process of selling properties to boost its cash position.

Dealing in the units of the M&G Property Portfolio was temporarily suspended on 4 December 2019 due to high levels of withdrawals by investors related to ongoing uncertainty over Brexit, as well as structural shifts in the UK retail sector.

M&G chief investment officer, Jack Daniels, said the group had been ‘encouraged’ by the support of many investors in the Fund who could understand its decision to ‘give the managers room and time’ to complete disposals from the Portfolio at fair prices.

“While customers want ready access to their investments, it’s also important that their long-term interests are protected,” Daniels said.

Since the Fund’s suspension, M&G revealed it has exchanged or completed the sale of £70.4m of assets and a further £172.2m are either under offer or in solicitors’ hands. At the end of December 2019, the cash held by the Fund was 4.8%.

Commenting on the latest development, AJ Bell head of active portfolios, Ryan Hughes, said: “With cash in the Fund at just under 5% at the end of December and a further 7% of the Fund currently under offer, the portfolio managers will want levels to be much higher before they are in a position to re-open.

“They will be very conscious to ensure there is a sufficient cash buffer following the re-opening, as the last thing they want is for the fund to have to suspend again if redemptions accelerate.

“With this update coming out at the same time as Woodford investors being told about their first payment, it reminds people of the dangers of having illiquid assets in daily traded funds. While other major property funds have avoided succumbing to a similar fate, investors need to understand the liquidity risk they are taking when investing in assets that are hard to sell in challenged markets.”

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