The City watchdog has launched a consultation into the suitability of these funds, which offer daily dealing, holding hard-to-trade assets like property. It is yet to announce its findings, but has said it could require investors to give 180 days’ notice of withdrawals.
Investors have pulled record amounts from property funds in anticipation of the new rules, withdrawing £1.9bn since suspensions started to lift in September according to Calastone, which processes fund transfers.
Oli Creasey, of investment manager Quilter Cheviot, said the high cash position in the M&G fund ahead of its reopening suggested the managers were expecting large withdrawals.
“A fund such as M&G’s will typically aim to have at least 20pc of its assets in cash, or other highly liquid assets, and so the increase to 33pc suggests material redemptions are expected,” he said.
Moira O’Neill, of stock broker Interactive Investor, said there was no guarantee the Financial Conduct Authority’s review would fix problems with property funds and suggested investors consider property investment trusts as alternatives.
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