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M&G applies a fair value adjustment to the M&G Property Portfolio

1 July 2016

London - M&G Investments (M&G) today announces that it is applying a fair value adjustment (FVA) to the M&G Property Portfolio. It takes immediate affect from today, 1 July.

M&G believes the FVA, equivalent to a 4.5 per cent reduction of the net asset value of the Fund, is in the best interests of all the Fund’s shareholders at a time of continued market uncertainty following the outcome of last week’s referendum.

The decision to apply the FVA has been made in consultation with Knight Frank, the Fund’s independent valuer. The Fund’s Depositary has been consulted and the Financial Conduct Authority has been notified.

The £4.6 billion M&G Property Portfolio invests in a portfolio of 182 UK commercial properties and is available to UK retail investors.

In reaching its decision, M&G has sought to balance the interests of shareholders who may leave the Fund with the interests of those who remain at a time when it is increasingly difficult to ascertain the market value of the Fund’s underlying assets.

In these circumstances, there is a risk that investors who redeem will receive too high a value for their shares at the expense of those who stay in the Fund. An FVA aims to ensure fair treatment for all shareholders while market uncertainty persists.

In the meantime, Knight Frank will continue to carry out weekly valuations of the portfolio and more frequently if necessary.

  • The Fair Value Adjustment is an adjustment to the value of the Fund’s assets invested in direct property and will be included in the calculation of the Net Asset Value of the Fund at today’s valuation point. The impact of the adjustment will be included in the dealing prices applied to all of today’s deals.
  • The feeder fund for the M&G Property Portfolio will be similarly impacted by the FVA.
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The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.
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