Reported today on City AM For the full article visit:
Why does it feel like we have been here before? Well, it's because we have.It wasn't that long ago when thousands of investors in property funds flocked to the exit door after the referendum, forcing several major asset managers to temporarily block withdrawals.So cue the deja vu when M&G yesterday suspended trading in its commercial Property Portfolio for the second time in less than four years.And that's before mentioning that M&G deferred withdrawals in a separate UK Property fund only a few months ago, which has a knock-on impact on some of Prudential's pension-holders.The Woodford scandal demonstrated that this is as true with property funds as it is with fund managers who pile money into early-stage biotech companies.Admittedly, this gating mechanism is in place to protect the remaining investors, by giving the fund managers time to sell-off the assets to meet redemption requests. And for those who are invested for long-term goals like pensions, the suspension won't be such an issue.But fund gating can be painfully frustrating for investors who are unwillingly locked in, particularly when it's not clear when they can access their money.Some will have tens of thousands of pounds frozen in a fund, so it's not just a matter of inconvenience either.The commercial property sector is currently out of favour with investors, with outflows reaching £1.6bn in the past year. A suspension of this kind has been expected as the retail sector in particular takes a beating.But poorly performing investments are only one part of the story; the root cause is the mismatch between the daily dealings of the funds and the illiquid nature of the underlying assets. The Woodford scandal demonstrated that this is as true with property funds as it is with fund managers who pile money into ea
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