ASI to review property strategy in wake of M&G suspension - reports

In the wake of the suspension in trading of the M&G Property Portfolio, Aberdeen said it would rethink its exposure to retail assets and look to diversify its property business, The Times reported.

ASI appointed Neil Slater, former CEO of its Japanese business, to the role as head of its real estate division, which oversees £43bn of assets around the world, six weeks ago.

And Slater's first job will be to review the division's strategy and capabilities as its £1.2bn UK property fund has come under pressure. It was recently reported by the FT that the fund saw outflows of £31m on the day M&G's offering was suspended.

Slater said the firm needed to "ensure that we're well placed for the future" by "adding resource to strengthen further areas of the business, such as in Asia or our residential capability".

It was suggested the addition to its residential capabilities would draw on the firm's experience in Germany, where it invests around £3bn in residential assets. It would also look into the rise of e-commerce and flexible working, Slater added.

M&G gated its fund after a run of redemptions due to Brexit uncertainty and structural challenges in the retail sector. The news worried investors, who feared contagion may hit other property funds as it did in the immediate aftermath of the Brexit referendum in 2016.

ASI's UK Property fund has more than 40% of its portfolio invested in retail assets, a sector which has come under fire from a shift by consumers away from bricks and mortar towards online shopping.

Research firm UBS recently suggested Aberdeen UK Property was the most likely of M&G's peers to follow suit due to its poor recent performance, daily liquidity profile and the fact it has shrunk by a third in the year to date.

The fund currently has around 12.5% of its portfolio in cash to meet redemptions.

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