I want to let you know that we will be reopening the M&G Property Portfolio, our open-ended commercial property fund, on 4 November. As most of you will know, we suspended trading in the fund on 4 July, when there was a lot of uncertainty in the commercial property market following the EU referendum. Suspending the fund wasn’t a decision we took lightly, but we felt that it was in the best interests of investors to do so, in these very unusual circumstances. Many of our peers with similar funds took the same decision.
So what has changed over the last four months? In late June and July, in the immediate aftermath of the referendum, it was difficult to value commercial properties accurately, as few transactions were taking place in the market. Property-owners were forced to accept substantial discounts if they wanted to sell. We believed the best course of action was to be patient, give the market time to settle down, and to increase the amount of cash in our fund gradually, through selling mostly lesser quality assets at sensible prices. And that is what our fund manager, Fiona Rowley, has done.
As confidence has improved in the property market over the last four months, Fiona has successfully sold several properties, at price levels very close to what they would have been before the referendum. Those sales have raised cash levels to a point where we can reopen the fund. Fiona's patience has also allowed her to choose carefully which assets to sell. She has kept prime assets in the portfolio – high quality properties which she believes are less risky in times of uncertainty - and has instead sold mostly lesser quality assets, which carried greater risk. The result is a portfolio which is in a good position to cope with any further volatility we might see, and it’s our belief that the re-opening of the fund, at this point, is in the best interests of investors.
On behalf of Fiona and all of us at M&G, thank you all for your patience over the last four months.
M&G Securities Limited
Further information on the M&G Property Portfolio