M&G Property Portfolio's (GB00B89X8P64) suspension from trading is to continue to allow its managers to raise more cash without having to conduct a fire sale of assets. M&G Investments said that that doing this will allow the fund’s managers to carry on raising cash to meet investor redemptions in an orderly fashion, while preserving value for those who remain in the fund over the long term. The fund has been suspended since 4 December due to high levels of investor redemptions, at a time when Brexit uncertainty and ongoing structural shifts in the UK retail sector had made it difficult to sell commercial property.
M&G Investments said that the fund's managers "had made good progress in raising cash by making selective disposals at market prices." They have exchanged or completed on the sale of assets worth £70.4m since the fund was suspended from trading in early December, and a further £172.2m of its assets are under offer or in solicitors’ hands. The fund had assets worth about £2.36bn at the end of December, of which 4.8 per cent were cash.
The fund had a 5 per cent cash weighting at the end of October and has tended to hold much less than some of its peers, one of which had a buffer of more than 30 per cent late last year. Jack Daniels, chief investment officer of M&G, argued that customers pay for the fund to “invest their money, not keep it idle [in cash]," but this approach has left the fund in a difficult position at times of heavy outflows. It experienced net outflows of around £1bn over the first 11 months of 2019, according to data provider Morningstar.
M&G Property Portfolio also had a difficult 2019 in terms of its performance, losing 7.6 per cent, according to data provider FE. But the fund continues to make income payments as normal and has waived 30 per cent of its annual charge for the duration of its suspension.
