Temporary suspension of dealing

 On 4^th December 2019, M&G Investments (M&G) announced a temporary suspension of dealing in the shares of M&G Property Portfolio and its feeder fund, M&G Feeder of Property Portfolio.

 M&G has taken this step because redemptions have risen materially due to continued political uncertainty and an ongoing structural shift in the UK retail sector.  They believe that a temporary suspension in dealing will enable the fund managers to raise cash levels in a controlled manner, with a view to ensuring asset disposals are achieved at reasonable prices, thereby protecting the interest of the funds’ shareholders.

 This suspension was taken in agreement with the depositary and the FCA has been informed.

 In practical terms, the following rules apply during suspension:

•  Orders placed after midday on 4^th December 2019 will not be processed until the suspension is lifted.
• The funds will still be actively managed whilst in suspension, but in recognition of customers’ temporary inability to access their investments, M&G is waiving 30% of its annual charge.  This arrangement will end when the funds resume dealing.
• M&G will review the suspension on a monthly basis.  At this stage, the firm is unable to say how long the suspension will last.
• The firm will continue to publish daily prices.
• The funds will continue to make income distributions and investors will be able to access reports and updates as normal.  

 Further information can be found at www.mandg.co.uk/adviser.   

The fund can still be found on our Recommended list but, as a reminder of the current situation, we have added a note on the factsheet and also referred to the situation in our IA Sector Overview. 

This event clearly comes at a time of heightened focus on daily-dealing funds and their liquidity profiles.  The liquidity mis-match that is inherent to bricks-and-mortar property funds is particularly pertinent but equally, it is also better understood following the events of the global financial crisis, as well as the EU referendum, when property funds were forced to apply temporary suspensions.  Property fund managers have these experiences to draw upon as they navigate this latest market disruption.  While dealing suspensions are clearly unwelcome, investors should always be prepared for this risk, particularly in this most illiquid and long-term of asset classes.