Join our community of smart investors

M&G Property Portfolio remains resilient

FUND PROFILE: M&G Property Portfolio's performance has been stable relative to the sector.
November 10, 2009

M&G Property Portfolio aims to deliver long-term total returns from a diversified portfolio of UK commercial property assets. Theoretically, this mandate should auger well for the fund given recent figures from the Investment Property Databank, which demonstrate a marked shift away from the residential property sector in favour of the commercial market. It's also worth noting that IMA property funds recorded net retail sales of £261m in September - the highest level since June 2007. However, the sector is recovering from a very low point, so any incipient recovery needs to be seen in context.

The fund's net asset value (NAV) has contracted by 28.6 per cent over the past three years. While this is slightly better than its IMA sector average, the M&G Property Portfolio hasn't kept pace over the last six months when the underlying value of commercial property funds (including both UK and international) climbed by a quarter. In a sense, this is indicative of the fund's volatility, which is low relative to the sector. In March of this year - as the sector approached its nadir - the NAV of M&G Property Portfolio had contracted by 18.9 per cent over the previous two quarters, whereas the sector average fall was 32.1 per cent over the same period. This relative resilience, reflects the portfolio's low void rate, stable tenancies and a bias towards long leaseholds.

Fiona Rowley has managed the M&G Property Portfolio over the past two years. Her tertiary background is in estate management, while her initial experience of the industry was gained through a spell with Knight Frank. She joined PRUPIM in 1994 as an investment surveyor, was appointed deputy fund manager of M&G Property Portfolio on its launch in 2005, and went one better in October 2007.

PRICE 69.55pSHARPE RATIO-1.28*
SIZE OF FUND:£697m6 MONTH PERFORMANCE8.86%*
No OF HOLDINGS:na1 YEAR PERFORMANCE-7.93%*
SET UP DATE08 Nov 053 YEAR PERFORMANCE-9.36%*
MANAGER START DATE01 Oct 07TOTAL EXPENSE RATIO1.7%*
BETA0.9*YIELD3.73%*
VOLATILITY (3-YEAR)-9.36%*MINIMUM INVESTMENT£1,000 initial, £100 additional
TRACKING ERRORnaMORE DETAILSmandg.com

Source: M&G Investments & *Morningstar (05/11/09)

Top ten tenants (as at 30/09/09)

LeaseholderPercentage of Net Income
Avaya UK                                         7.8
Clifford Chance                                 6.9
EDS                                                 5.8
J Sainsbury                                         4.3
NBC Apparel                                         3.9
Exel Europe                                          2.9
Credit Suisse Fund Administration                 2.8
Gist                                                 2.7
NDS                                                 2.6
House of Fraser                               2.4

Sector breakdown

SectorPercentage
Offices                         26.4
Industrials                         24.2
Retail warehouses                 18.7
Shops                                 15.5
Shopping centres                 10.7
Other                                 4.5