M&G Investments is to suspend trading in 21 funds, with three to shutter outright, as it moves £34 billion of assets from Britain to Luxembourg.
Wealth Manager sister publication New Model Adviser® reported that the suspensions will affect both UK and non-UK M&G customers and advisers, with the first starting this week.
In May, M&G announced it was transferring 21 of its UK-domiciled Oeic funds to its Luxembourg equivalent, representing £34.2 billion of assets. The funds being transferred are in non-sterling share class for non-UK investors.
Meanwhile, three UK funds will close following the move, as their UK investor base has been deemed too small for them to remain viable. The M&G Pan European Dividend, European Strategic Value and Global Corporate Bond funds will all shut down and return capital.
For each of the three funds, overseas investors hold more than 90% of their assets. Once these assets have been transferred to a Luxembourg version of the funds, the remaining stakes in the fund held by UK investors will be redeemed, unless they have previously opted to switch into another fund.
M&G’s former chief executive, Anne Richards, said at the time that the fund move was to ‘protect the interests of our non-UK customers by offering continued access to the current range of M&G’s investment strategies’, regardless of what happens with the Brexit negotiations.
In an email sent to an adviser seen by New Model Adviser®, M&G announced it is suspending all the share classes of the 21 funds that are moving to Luxembourg.
It is understood that fund closures are affecting all share classes of the M&G funds (both UK and non-UK) and the suspensions are taking place as part of the Luxembourg Brexit switch and are designed to minimise disruption for clients.
The fund suspensions are taking place in four tranches, with the first set of closures taking place this Thursday (see table below).
A spokeswoman for M&G said: 'M&G is working to protect the interests of its clients in the UK and abroad who wish to remain invested in M&G’s fund strategies after the UK leaves the EU, regardless of the outcome of the Brexit negotiations.
'Each series of mergers is scheduled to take place over a weekend, the funds being suspended on a day either side of the weekend. We have been consulting and working with the fund platforms to ensure this process is handled with the minimum of disruption to intermediaries and underlying clients.'
|Fund group||Funds||Date change effective from||Type of change|
|Tranche 1||M&G Securities Limited||M&G Asian||From 12 noon on 25 October 2018. Dealing recommences in the funds on 30 October 2018.||Fund suspension|
|M&G Episode Macro|
|M&G Global Emerging Markets|
|M&G Global Macro Bond|
|M&G Japan Smaller Companies|
|M&G Short Dated Corporate Bond|
|Tranche 2||M&G Securities Limited||M&G European Corporate Bond||From 12 noon on 8 November 2018. Dealing recommences in the funds on 13 November 2018.||Fund suspension|
|M&G Global Convertibles|
|M&G Global High Yield Bond|
|M&G Global Select|
|M&G North American Dividend|
|M&G North American Value|
|M&G Pan European Select|
|Tranche 3||M&G Securities Limited||M&G Emerging Markets Bond||From 12 noon on 6 December 2018. Dealing recommences in the funds on 11 December 2018.||Fund suspension|
|M&G European Strategic Value|
|M&G Global Dividend|
M&G Global Floating Rate High Yield
M&G Pan European Dividend
M&G Global Corporate Bond
|Tranche 4||M&G Securities Limited||M&G Optimal Income||From 12 noon on 7 March 2019. Dealing recommences in the fund on 12 March 2019.||Fund suspension|