A third U.K. asset manager has stopped trading in a multi-billion dollar property fund due to uncertainty with Brexit, the Wall Street Journal reported.
M&G Investments joined Aviva Investors and Standard Life Investments in halting withdrawals in the last 24 hours. M&G said it decided to stop trading after redemption requests in their property portfolio had high levels of uncertainty due to the Brexit vote.
"Aftershocks from the U.K.’s seismic vote to leave the European Union are pulsing through the property sector here," the article explained. "The U.K. commercial real-estate market holds in aggregate about £800 billion ($1.04 trillion) worth of assets."
"Some of the nation’s largest insurers and asset managers Tuesday moved to stop spooked investors pulling money out of their funds," the article explained. "In doing so they’re hoping to avoid selling the buildings they own, from shopping malls in the industrial northeast of the country to plush office buildings in the heart of the City of London, to pay investors."
A senior analysis at Hargreaves Lansdown said he wouldn’t be surprised if more firms took similar actions in the coming weeks.
"Investors in such ‘open-ended’ funds can usually cash in their holdings at any time even though the underlying buildings often take several months or even years to sell," the article states. "When investors rush for the exits at once, as in recent days, the funds can come under immediate pressure to sell their assets to pay investors."