Another week... another fund suspended

[Phooey]

M&G Property Portfolio. https://docs.mandg.com/docs/UK/Investor/MandG-Prop...

"Investors in one of the UK's biggest commercial property funds - worth £2.5bn - have been temporarily prevented from taking out their money."

Bugger. I think my IFA (firm) has put me into the above fund (M&G Feeder?). So, not only did they advise me to invest in Woodford, I'm now in another suspended fund

[Helicopter123]

Phooey said:

M&G Property Portfolio. https://docs.mandg.com/docs/UK/Investor/MandG-Prop...

"Investors in one of the UK's biggest commercial property funds - worth £2.5bn - have been temporarily prevented from taking out their money."

Bugger. I think my IFA (firm) has put me into the above fund (M&G Feeder?). So, not only did they advise me to invest in Woodford, I'm now in another suspended fund

Putting you into both funds was almost certainly the right thing for you at the time (They were “suitable” at point of recommendation in our language). If you are paying an ongoing advice fee however, I would question why you were never advised to pull out? Woodford unravelled very publicly over a long time, and the M&G fund has been under pressure for months. A half decent IFA should have been at least talking with you about both situations.

[Phooey]

Helicopter123 said:

Putting you into both funds was almost certainly the right thing for you at the time (They were “suitable” at point of recommendation in our language). If you are paying an ongoing advice fee however, I would question why you were never advised to pull out? Woodford unravelled very publicly over a long time, and the M&G fund has been under pressure for months. A half decent IFA should have been at least talking with you about both situations.

It's a portfolio of approx 30 different funds that have different weightings according to risk level chosen. The firm has built up to £200million in clients money. As far as I believe all clients are in one of these portfolios. I think what has happened is the people running the company have tried to be clever - probably playing some kind of 'fund manager' role and now their inexperience is starting to bite them (us!) on the arse.

But yes you are right - if they were clever they would of ditched the above funds long time ago.

I'm in a bit of a pickle atm because I've tried switching everything over but Standard Life Investments (WRAP provider) are dragging their heels, demanding letters etc etc. Not really sure what I can do at present

[NickCQ]

This will happen for as long as funds with such a liquidity/duration mismatch are allowed to exist without punitive liquidity reserves (like a bank has to slow down runs). We saw the same after the Brexit vote.

I would never invest in an open-ended property fund.
However, as long as they can sell enough properties in an orderly fashion during the suspension, the outcome should be better than Woodford.

[Helicopter123]

NickCQ said:

This will happen for as long as funds with such a liquidity/duration mismatch are allowed to exist without punitive liquidity reserves (like a bank has to slow down runs). We saw the same after the Brexit vote.

I would never invest in an open-ended property fund.
However, as long as they can sell enough properties in an orderly fashion during the suspension, the outcome should be better than Woodford.

Some funds have a far better track record of managing liquidity than others - not all funds closed in 2016 for example.

The problem with a closed ended fund is not so much the NAV fluctuations, but the widening of the discount to NAV in times of poor returns/nervous investors. You can get out, but at an awful price.

[GT03ROB]

This is the problem with property funds, Always has been, always will be.

[anonymous-user]

"We thank you for your patience and understanding in this matter and for your continued investment with M&G.

"Yours sincerely

"Laurence Mumford"

Perhaps Mr Mumford should have stuck to churning out tedious songs. Not so much "I will wait" as "you will wait"...
https://www.youtube.com/watch?v=rGKfrgqWcv0&li...

[NickCQ]

Helicopter123 said:

Some funds have a far better track record of managing liquidity than others - not all funds closed in 2016 for example.

The problem with a closed ended fund is not so much the NAV fluctuations, but the widening of the discount to NAV in times of poor returns/nervous investors. You can get out, but at an awful price.

Call me a cynic but I think the market (even acting as a herd) has a better view of what NAV is than the fund manager.

NAV is just where you can get Cushmans or whomever to sign off on the valuations and is subject to many layers of manipulation. Management’s incentive is usually to avoid write-downs, hence these gaps open up.

The lack of volatility in NAV doesn’t mean that the underlying collateral isn’t volatile, it just shows that it’s not being marked to market properly.

[Elderly]

I have bought property and land from M & G,
and they and their agents certainly didn't act in the best way on behalf of their shareholders.

[bitchstewie]

Seems a lot of the outflows that caused the suspension were from other business units in M&G group.

https://www.thetimes.co.uk/edition/business/m-amp-...

[Helicopter123]

bhstewie said:

Seems a lot of the outflows that caused the suspension were from other business units in M&G group.

https://www.thetimes.co.uk/edition/business/m-amp-...

That just stinks, doesn't it?

[DonkeyApple]

NickCQ said:

This will happen for as long as funds with such a liquidity/duration mismatch are allowed to exist without punitive liquidity reserves (like a bank has to slow down runs). We saw the same after the Brexit vote.

I would never invest in an open-ended property fund.
However, as long as they can sell enough properties in an orderly fashion during the suspension, the outcome should be better than Woodford.

Also, with property funds you go into them knowing that the underlying asset is relatively illiquid and that suspensions aren’t completely uncommon. Knowing nothing about this particular situation I would hazard that it is a different scenario to Woodford and wouldn’t immediately be all that concerned.

[anonymous-user]

DonkeyApple said:

Also, with property funds you go into them knowing that the underlying asset is relatively illiquid and that suspensions aren’t completely uncommon. Knowing nothing about this particular situation I would hazard that it is a different scenario to Woodford and wouldn’t immediately be all that concerned.

Agreed.

Quite a bit of coverage in the ST today including a direct link to the decline in U.K. retail property demand/valuations.

[FredClogs]

I'm an investment novice and I knew there was likely suspensions for the more illiquid UK property funds on the horizon.

Financial markets are extremely complex, like a car engine, but the overall ability to use and understand the basic principle of how they work isn't that hard. I can service an engine, I couldn't rebuild one... I've not got a great deal of sympathy nor would expect any for myself if caught in one if these fund suspensions.

[blueg33]

Most Uk property funds currently have a freeze on buying assets too.

I’ve a £15m portfolio of index linked government backed assets that the funds have just “parked” a decision on until after the new Brexit deadline.

Leaves me with a cash flow hole of about £2m. Which is a problem.

[NickCQ]

DonkeyApple said:

Also, with property funds you go into them knowing that the underlying asset is relatively illiquid and that suspensions aren’t completely uncommon. Knowing nothing about this particular situation I would hazard that it is a different scenario to Woodford and wouldn’t immediately be all that concerned.

That said, you probably get reverse cherry picked, because you sell your best asset to [Blackstone] at a knockdown price because they can be there with the cheque in a week.