Canada Life says suspends property funds after Brexit vote

Aviva Investors, the fund management arm of insurance giant Aviva, has brought a temporary suspension on all dealings in its U.K. Property Trust, due to the negative impact caused by Britain's vote to exit the European Union.

M&G Investments has followed two other major finance firms and suspended trading in the UK's biggest property fund following the Brexit vote.

Martin Gilbert, chief executive of Aberdeen Asset Management, says: "Investors who placed trades yesterday have asked for more time to consider whether to withdraw their redemptions which we have now made arrangements to provide them with".

The four Canada Life funds are: Canlife Property Life Fund, Canlife Property Pension Fund, Canlife UK Property Life Fund and Canlife UK Property Pension Fund.

Investors trying to cash in their shares in commercial property funds face a long wait for their money as managers suspend trading.

Standard Life closed its £2.9bn commercial property fund on Monday in what is thought to be the first such move since the financial crisis.

"These managers will now be adding to the supply of commercial properties on the market, which is likely to put downward pressure on prices".

"Suspension will give fund managers breathing space to make sure any disposals make reasonable prices and is the best way to protect investor interests", said a spokesman. A spokeswoman for Royal London pointed to the fund's largely institutional client base and the fact that, unlike other funds in its class, it offers investors the chance to withdraw cash only once a month.

The Standard Life fund had a cash/liquidity ratio of 13%, the Aviva fund was at 9.3% for the end of May and the M&G fund was only 6.7% by the end of June.

Prudential has suspended investments and redemptions in its single-asset unit-linked property funds following a wave of high-profile fund gatings.

"The retail funds had cash and balances in liquid shares" to manage normal levels of outflows, he said.

The financial ombudsman said the suspensions were "quite troubling" and it was being approached by consumers anxious about investments.

The Bank of England is also monitoring the behaviour of investors in open-ended commercial property funds, because they see it as one of the risks to United Kingdom financial stability.

Related news: