First 50 Funds update: M&G Property fund re-opens for business

Published by Rachel Lacey on 21 October 2016.
Last updated on 25 October 2016

Looking out of commercial property

The M&G Property Portfolio, which is one of Moneywise’s First 50 Funds for beginners has become the latest commercial property fund to reopen its doors. Trading will resume at noon on Friday 4 November.

Many property funds were forced to suspend trading over the summer when the Brexit vote initiated a rush of redemptions from anxious investors. This causes problems for commercial property funds because it requires them to sell direct property holdings, which may not always be possible or practical, especially during times of market stress.

However, now that markets have stabilised, fund managers, now feel more confident enabling those investors who want to cash in their investments to do so.

 

Standard Life re-opened its commercial property fund earlier this week, following in the footsteps of Henderson UK Property, and Threadneedle UK Property.

Commenting on the announcement from M&G, Adrian Lowcock, investment director at Architas says: “The initial shock of the Brexit vote hit the property sector hard, however over the last few months we have seen the market stabilise and return to normality. The ability to suspend funds has largely worked and protected investors by giving managers the time to decide which properties to sell and to get the best possible price for those assets.”

“The impact of the summer freeze on property funds is that many managers are likely to retain larger cash positions to try and avoid having to suspend funds again if the sector sees more large withdrawals.”

However Mr Lowcock says that investors still need to be aware of these risks before they invest in the sector. He adds: “Property can play a useful role providing diversification, however investors should only consider investing in property funds for the longer term and be willing to accept that fund suspension is one of the risks that come with investing in the asset class.”

 

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