Whitechurch Portfolio Updates: 9.12.19

6th December 2019

Monday 9th December Update:

The recent suspension of the M&G Property portfolio due to unusually high and sustained outflows has led to questions over the positioning of other property funds.  We believe the M&G Fund, which is currently valued at around £2.5 billion and has seen nearly £1 billion of outflows over the past year, is different in structure to the exposure within our portfolios.

The fund has very large lot sizes (which can be more challenging to sell) and a long tail of retail exposure which has not helped the managers as the retail space has continued to be hit with the decline of the high street. Over the last year, we have significantly reduced property exposure across the range of Whitechurch portfolios and focused on using three funds (depending on strategy risk and objective) and we have provided short summaries of the funds positioning below.

 

BMO UK Property Growth & Income Fund:

This is a very liquid fund with 74% in real estate equities and 26% in direct properties. The direct property section of the portfolio has a small average lot size which leads to a wider range of potential buyers and steers away from investment in the retail sector. It is diversified across Europe and the UK.

BMO UK Property Fund:

This is a small fund launched in 2010 so it does not have the legacy holding issues experienced by M&G. The retail exposure is focused on warehouses rather than retail centres and the portfolio has small average lot sizes with a large holding in cash.

Kames Property Income Fund:

This fund is a very recent launch (2014) which again means no issues with legacy holdings and focuses on smaller average lot sizes and the fund managers have been building their cash positions.