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M&G reopens suspended £4.3bn fund as ‘confidence returns’

The investment arm of UK pension fund Prudential has lifted the gate on its open-ended UK property fund. The move means M&G is the last of seven firms, which suspended their retail funds in the wake of Brexit, to signal a reopening. 

M&G Investment, the investment arm of UK pension fund Prudential, has lifted the suspension on its £4.3 billion UK property fund, citing a “return of confidence” to the market since the UK referendum.

M&G confirmed it has “sold, exchanged or placed under offer” 58 properties from the fund, for a total of £718 million.

On July 5, two weeks after the EU referendum, M&G announced a temporary suspension on its M&G Property Portfolio after investor redemptions rose markedly due to high levels of uncertainty in the UK commercial property market.

William Nott, chief executive of M&G Securities, said suspending the fund gave the firm time to select the most appropriate assets to sell in order to “preserve the integrity of the fund”.

“Suspending the fund wasn’t a decision we took lightly, but we felt it was the only way to protect the interests of investors in what were very unusual circumstances in the aftermath of the referendum,” said Nott.

“As such, the fund manager has kept higher quality assets while reducing the exposure to assets deemed riskier than their prime counterparts, putting the portfolio in a good position for any further volatility that may be experienced in the lead up to Brexit,” he added.

Following the EU referendum result, Standard Life Investments, Henderson Global, Aviva Investors, M&G, Canada Life, Columbia Threadneedle and Aberdeen Asset Management all suspended trading on their UK property funds after a run of redemptions from jittery investors. The move meant around 60 percent of the UK commercial property market, held in such vehicles, was under lock and key.

But as market volatility subsided in the months after the referendum, one by one the firms began either lifting the suspensions or informing investors when they would be lifted.

At present, six of the firms have lifted the gate, while Aviva has stated it will reopen its fund in Q1 in 2017.