The portfolio consists of 77 quality properties, negligible voids and long leases. Around 60% of the portfolio is invested in the South East. It also has an above average allocation to higher quality tenants. It has c.25% in cash which gives it flexibility to invest quickly and to meet redemption requests, but could also be a drag on performance and dividends. This fund will be merging with the Old Mutual Property fund, which completes in early 2015. This will add to the numbers of properties and tenants that will need managing. In November 2014 we reduced the rating of this fund from 5 to 4 stars, to reflect the cash drag on performance, the large size of the fund limiting its ability to buy smaller properties in the UK regions where there is more scope for capital value growth.
The fund manager's strategy is to focus predominantly on prime (as opposed to secondary) bricks and mortar property assets, located principally in the South East of England, which also stand to benefit from the existing planning restrictions. The current portfolio contains an overweight to regional offices and lower risks tenants. Average weighted lease length is in line with the IPD index.