The frozen M&G Property Portfolio further increased its cash position this month, but the fund’s authorised corporate director is keeping the fund shut to protect investors.
In the latest update, the fund’s ACD said it sold two assets in January, taking the cash holding to 21%, up from 18.9% at the last update on 22 December.
But it said continuing the suspension in dealing in its shares was necessary to protect the interests of investors. The fund has now been frozen since 4 December 2019.
“Despite the renewed tightening of social distancing measures, which will further impact market liquidity in the short term and the ability to travel and inspect properties, the fund manager continues to make good progress with sales,” it said.
“Since our last update, £39.4m of assets have been sold and a further £134.5m are under offer. Assuming all progress to completion, the cash position will rise to 27.5%.”
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Historically the fund has run a relatively low cash position (between 7.5% and 12.5%) “to avoid diluting returns and maximise exposure to the asset class”, but the fund manager said it will now target a long-term cash weighting of about 20% to improve liquidity.
M&G also said it will not charge fees on cash held in excess of 20% while the fund is in suspension.
It continues to waive 30% of the management charge during while dealing is suspended.
Last week, M&G announced sweeping fee cuts across 45 of its mutual funds, although the M&G Property Portfolio was unaffected, with the I share class remaining at 0.85% per annum.
