AXA halts withdrawals from two funds for six months

French fund manager AXA became the latest casualty of the slowdown in the commercial property market on Thursday after imposing a six-month freeze on investors looking to flee the sector. The group said it had decided to implement 'a temporary deferral' to fund switches out, surrenders from and transfers out of two funds, AXA Life Property and AXA Pension Property.

Blaming the slowdown in the commercial property market, AXA said that it had written to all its customers who are invested in these funds in order to keep them fully informed. Regular withdrawals, death claims and payment of pension benefits on retirement will not be affected by the deferral.

Ian Colquhoun, managing director at the investment office, said: 'The commercial property slowdown has resulted in a fall in the liquidity of property funds across the marketplace. The sale of a property can take a long time to complete - on average five months or more - making commercial property funds less liquid than other assets. Given the current liquidity of the funds the deferral is a sensible and prudent decision, taken as a result of careful assessment as to what is best for the funds’ investors as a whole'.

'This measure, which is normal in such circumstances, will permit the managers of the funds to sell selected properties in a considered manner and at a reasonable price,' he added.

The move by the French insurer follows the decision by Dutch insurance group Aegon's Scottish Equitable last week to call a halt to withdrawals from investors for up to a year. Scottish Equitable runs a £ 2 bn (EUR 2.7 bn) property fund, one of the largest in the UK.