M&G Investments is set to re-open its beleaguered £2bn Property Portfolio, which has been in limbo for the past 16-months, in May.
The property fund was forced to close its doors on 4 December 2019 due to liquidity reasons after its independent valuer Knight Frank slashed the value of its retail holdings, prompting a wave of investors to head for the exit.
In its March update, which fell on the anniversary of the raft of property fund suspensions triggered by the Covid crisis, M&G said the open-ended vehicle was likely to begin trading sometime before the end of Q2 after it was able to boost cash levels above 25% in February.
But on Tuesday the fund group said its Property Portfolio and feeder fund will re-open for dealing sooner than expected at midday on 10 May.
M&G said the fund’s authorised corporate director M&G Securities and its depositary were now satisfied the fund has a suitable liquidity position to meet redemptions and has notified the Financial Conduct Authority of its intention to re-open.
Laurence Mumford, chair of M&G Securities, said: “We deeply regret the inconvenience that suspension has caused our customers and clients. The decision to suspend was taken to protect the interests of all of our investors, enabling the fund manager to sell assets in an orderly fashion. We believe this has preserved value for customers, while also maintaining the integrity and future prospects of the fund.”
Retail exposure slashed
M&G said portfolio manager Justin Upton had made a number of changes to the fund during the almost year and a half suspension period, divesting a total of 38 “carefully selected properties,” a move it claims will result in reduced risk a stronger income stream.
The bulk of the disposals or 38.8% were retail properties. At suspension the fund held a high concentration of assets in retailers, which made up 38.4% of the portfolio but now that has been shaved down to 28.1%, M&G said.
The Property Portfolio is now overweight to industrials and its assets in the office sector are focused on central business districts.
Cash in the fund currently sits at 33.2%. Moving forward M&G plans on targeting a cash weighting around 20% to “enhance liquidity management”.
Property Portfolio to switch to dual-pricing
In addition M&G said it would be changing the fund’s pricing methodology to dual pricing on a full spread basis from 25 June.
It said this would provide greater dealing clarity, reduce the potential for large price fluctuations and provide stronger alignment with the fund’s long term horizon.
A detailed letter of the changes, which M&G will bear the cost of implementing, is being sent to customers in the fund.
Since the Property Portfolio’s suspension M&G has waived 30% of the fund’s annual charge and has not charged fees on cash held in excess of 20%.
