(Update: adds details of fund closures)
M&G Investments is suspending 21 of its funds as it moves £34 billion of assets from Britain to Luxembourg, New Model Adviser® can reveal.
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.
M&G’s former chief executive, Anne Richards, said at the time 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 the 21 funds that are moving to Luxembourg.
New Model Adviser® understands the fund closures are affecting all share classes of the M&G funds (both UK and non-UK). The suspensions are taking place as part of the Luxembourg Brexit switch and are designed to minimise disruption for clients.
The fund suspensions are happening in four tranches, with the first set of closures taking place this Thursday (see table below).
Three UK funds will meanwhile close following the move, as their UK investor base has been deemed too small for them to remain viable. They are: M&G Pan European Dividend, European Strategic Value and Global Corporate Bond.
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.
The total UK and non-UK share classes of the M&G funds affected are £41.4 billion, including £23.2 billion in the M&G Optimal Income fund, managed by Richard Woolnough and £6.4 billion in the M&G Global Dividend fund, managed by Citywire + rated Stuart Rhodes.
When contacted by New Model Adviser®, 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.
'As such, 21 funds will be split, with assets held by non-UK investors merged into equivalent Luxembourg funds over the next six months. Each series of mergers is scheduled to take place over a weekend, the funds being suspended on a day either side of the weekend.’
|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|