TORONTO – Canada Life has suspended trading of its U.K. property funds, one of several companies to make the move in response to investor concern about the impact of last week’s vote by the United Kingdom to leave the European Union.
The insurance company — now part of Power Financial Corp. as a subsidiary of Great-West Lifeco (TSX:GWO) — says its U.K. property funds are valued at 500 million pounds.
However, the value of the pound has declined as a result of the Leave side’s victory, pushing down the value of U.K. assets and increasing the number of investors that want to withdraw money from property funds.
An excessive amount of fund withdrawals could use up cash reserves, potentially forcing the sale of properties at low prices.
“Given the uncertainty regarding property valuations in the U.K., we have acted to restrict transactions in our U.K. property funds to ensure fairness to both exiting and continuing policyholders,” Canada Life said Wednesday in an emailed statement.
“This is consistent with the actions being taken across a range of U.K. property funds.”
Canada Life is one of six fund managers known to have suspended trading on their U.K. property funds.