Fund managers may decide to suspend fund if the number of withdrawal requests reaches such a level that they are unable to manage the fund’s liquidity. Effectively, everyone wants their capital out at the same time. Many of you will recall the ‘Run on Northern Rock’ in 2007 as people queued at cash machines to withdraw their money.
If one of the funds you have invested in has been suspended, the first thing to establish is whether it has been ‘fully suspended’ or ‘partially closed’. In the first set of circumstances, you won’t be able to sell any of your holdings until the suspension is lifted. In the latter case, you will still be able to sell your units and or switch to another fund. In either situation, this is typically not a positive sign. We would advise speaking to one of our Advisers to understand your options and what you may be able to do to minimise any potential losses.