Increased uncertainty and volatility in markets has resulted in suspension of the following funds which Nationwide has distributed:

Fund and date suspended:

  • M&G Feeder of Property Portfolio Fund - 4th December 2019
  • Kames Property Income Fund – noon on 16th March 2020
  • Janus Henderson UK Property PAIF – noon on 16th March 2020
  • L&G UK Property Fund – noon on 17th March 2020
  • Standard Life Investments UK Real Estate Fund – noon on 17th March 2020

What happened?

In 2019 the M&G feeder of Property Portfolio fund was unable to meet the demands of withdrawals and suspended. More funds suspended recently because they have been unable to value the properties within the funds considering the Coronavirus (COVID-19) pandemic.

This means they have stopped accepting further investment into and Switching from/withdrawals out of the funds for the time being.

If you are a portfolio customer of Nationwide, you could have a proportion of your portfolio invested in these funds.

Property funds v equities

Whilst property funds are generally less risky than equities, they can go through periods of time when funds are less/not accessible.

Unlike equities – where you are investing in shares of that company – commercial property funds typically invest in buildings, warehouses or shopping centers and like house purchases, can take a significant length of time to be bought and sold.

Why suspend trading?

Increased market volatility and uncertainty has created an environment in which investors have become more nervous about investing in the UK commercial property market and valuations of underlying properties has been more difficult.

Unlike investing in equities, investing in commercial property is less liquid as transactions take a long time to complete. Equally, the fund managers want to ensure they get the best deal possible for their investors and do not want to participate in a ‘fire sale’ whereby they sell properties below their fair value in order to meet redemptions.

Fund managers will do all they can to avoid suspending trading in their Fund, but unusual and exceptional circumstances can mean this happens at times. The suspension allows for an orderly valuation and sale of properties to help ensure that the strong attributes of the portfolio in terms of its mix of properties and quality tenant base are not compromised while the cash buffer can be increased ahead of re-opening the fund.

The suspensions will be reviewed on a regular basis and lifted when it is deemed prudent to do so.

What does this mean for my investments?

Deals placed after the suspensions will not be accepted and will be applied to the appropriate product cash facility. You can arrange for investment of these monies into any open fund via your Aegon Customer Dashboard  – or get in contact with your Financial Advisor if you feel you need advice.

The funds will continue to be actively managed by the fund managers who will also continue to report on any investment activity as normal. For example M&G confirmed that "in recognition of customers' temporary inability to access their investment", they will be waiving 30% of its annual charge, which will end when the fund resumes dealing. This will be different between funds at various times, so please check the individual fund websites for more information.

Depending on your levels of trading online through your Aegon Customer Dashboard, and your attitude to risk, your money held within a property fund should represent only a small proportion of your overall investment portfolio, which could also include; government bonds (GILTS), corporate bonds and equities.

Your funds continue to be invested and securely held for your benefit. Like any investments, the value can go down as well as up and you may not get back the money originally invested. If you have altered or created a new portfolio during the period your fund suspended, or simply want more info then please see our FAQs below.

Next steps

Our investment portfolio should be considered as a medium to long term holding. If you don’t currently need to access your portfolio, then there is no action required. If you do need to access monies from your portfolio, you may want to contact your Financial Advisor to make sure all your options are considered. Please note, you will not be able to make any withdrawals from these funds until the suspension is lifted.

If you hold these funds or are in the process of a transaction which involves them, Aegon will contact you regarding this as soon as possible. Aegon will also notify you when the fund suspensions are lifted.

FAQs

Increased market volatility and uncertainty has created an environment in which investors have become more nervous about investing in the UK commercial property market and valuations of underlying properties have been more difficult.

Yes, the fund managers will continue to actively manage the funds and will continue to report on any investment activity as normal.

The funds use independent valuers to value their property assets. Since the suspensions were implemented, the funds’ independent valuers have moved from valuing these assets on a monthly basis to a weekly basis.

You can either log into your Aegon Customer Dashboard or check our fund table.

There is no maximum time limit on how long a fund can be suspended. The fund groups are not able to say how long they expect their respective suspensions to last. They are monitoring the situation very closely and this is formally reviewed every 28 days (from the date of suspension).

Your money continues to be invested and securely held for your benefit. Like any investments, the value can go down as well as up and you may not get back the money originally invested.

The suspensions have been implemented in order to ensure the fund managers can conduct property transactions in such a way that allows them to get the best possible deal for existing customers.

Aegon will be unable to sell units from the above funds, therefore they will process the part of the transaction which involves funds which are not suspended, and the suspended fund monies will be retained.

If you request a withdrawal consisting entirely from funds which are not suspended then this will go through as normal.

If you request a withdrawal using a proportional spread from your portfolio Aegon will be unable to sell units from the above funds, therefore they will process the instruction spreading the withdrawal amount between your non suspended funds, and the amount invested in the suspended funds will remain. This will potentially alter your percentage proportion of funds held within property compared to your whole portfolio, so please be mindful of this.

Yes – your income will not be affected.

If you have initiated a transaction which involves the above funds, and Aegon cannot process the transaction, they will contact you and inform you of your options.

If your ISA is from previous years' contributions i.e. you haven’t put any money in to it this year, then any money that is not invested in a suspended fund can be moved in the normal way. Your current provider will simply retain the money in the suspended fund as a Stocks & Shares ISA until the suspension lifts. The current provider should explain your options for the remaining money but will aim to complete your request to move it as soon as they can.

For any ISA contributions in the current year, the whole Stocks and Shares ISA has to be moved together, so as the suspended part cannot be moved at present the whole of this year’s contributions will need to stay where they are until the suspension lifts.

You can still withdraw monies from funds which don’t involve suspended funds, but please be aware that a standard withdrawal/redemption from an ISA will lose its ISA status unless transferred to another ISA product. Please see above FAQ on full and partial withdrawals.

Any regular premiums/payments which don’t involve the above funds will be processed as normal.

If your payment is due to the above funds during the period of the suspension Aegon may need to change your Direct Debit instruction to pay the amount originally instructed to enter the above funds into the appropriate product cash facility.

Aegon will contact you if this situation occurs and give you information on options for your regular payment moving forward.

You may see information on the fund websites referring to Direct Debits being cancelled. Please be assured that this only refers to customers directly trading with the fund itself, and the proportion of your Direct Debit set up through NBS/Aegon will enter the appropriate product cash facility as above.

Aegon will be writing to all customers affected, including those who have initiated transactions recently, or simply hold the funds, explaining the current situation and what to do.

If you have any specific questions around your investments that haven’t been answered within these pages, please contact your Financial Advisor, or call us on 0800 030 4078 Monday to Friday, 9am to 5pm.

This is not intended to promote or provide a recommendation in relation to our investment service. Any comments made are intended to provide general information only. If you would like any further information, please contact your Financial Advisor.

The value of your investment can go down as well as up so you may get back less than you originally invested.

If you have any specific questions around your investments that haven’t been answered within these pages, please contact your Financial Advisor, or call us on

0800 030 4078 Monday to Friday, 9am to 5pm.

This is not intended to promote or provide a recommendation in relation to our investment service. Any comments made are intended to provide general information only. If you would like any further information, please contact a Financial Adviser.

The value of your investment can go down as well as up so you may get back less than you originally invested.

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