In the immediate aftermath of the Brexit vote, open-ended funds for small-time private investors were the only real source of distress in the property market. That distress is starting to emerge again.

Almost half a billion pounds were withdrawn from open-ended funds in the final quarter of 2018, as nervousness grows about the impact that a hard Brexit could have on commercial property, according to a report by Bloomberg using data from Morningstar Direct. That is the highest amount since the quarter running up to the referendum in 2016, and the £492M of new withdrawals compares to just £58M in the preceding quarter.

These funds have around £24B of assets in total, and some are selling properties in order to bolster cash positions ahead of the nominal date of the UK’s exit from the EU on 29 March.

But there is a problem: They have already sold many of their most liquid assets, principally London offices and logistics units, leaving them with a big exposure to the out-of-favour retail sector.

Overall a third of their assets are retail properties, Bloomberg reported. The Aberdeen Investors UK Property Fund has 53% of its assets in retail property, a sector where values are being reduced on a monthly basis. This retail exposure could hinder funds’ ability to raise cash by selling assets if there is another flood of redemption requests post 29 March.

The Financial Conduct Authority is holding a consultation on whether regulations need to be changed for open-ended funds that hold illiquid assets like property.