connect 4 - shaping up your portfolio · listed infrastructure universe (‘listed...
TRANSCRIPT
Connect 4 - Shaping up your portfolio
Graeme Abell – Director of Strategic Accounts
March 2019
2
Learning objectives
Present
the case for Commercial
Property and Global
Infrastructure as a
diversifying asset in a
modern portfolio or
investment solution
Explain
the performance of
Commercial Property post
Brexit vote, the liquidity
concerns and the prospects
beyond Brexit
Describe
the characteristics and
attractions of Global
Infrastructure and consider
its place as part of a well-
diversified portfolio
3
The shape of things to come!
Commercial property – what shape is it in?
M&G, helping you to be ship shape
4
Not all asset classes were out of shape…
Source: Thomson Reuters Datastream, 31 December 2018. Rebased to 0 at 31 December 2017. Image source: By Photographer is Mate 3rd Class Michael BuslovichPerson is Storekeeper 3rd Class Robert
Franke - http://www.navy.mil/view_image.asp?id=24054, Public Domain, https://commons.wikimedia.org/w/index.php?curid=129426
Review of 2018Asset class performance over 2018
-9.5-8.9
-1.1
0.2 0.6
2.9
5.7
13.6
-10
-5
0
5
10
15
FTSE All ShareIndex
MSCI ACWI EXUS Index
EuropeanCorporate
Bonds
Cash FTSE UK Gilts UK DirectProperty
FTSEDeveloped Core
Infrastructure
FTSE NareitInfrastructure
REITs
%
5
Getting physical and INTO shape with your portfolios…
A genuinely differentiated risk/return profile
Source: M&G, PCR team, 25 August 2017. Yield and volatility of Barclays Global Aggregate Total Return Index (‘Fixed Income’), MSCI ACWI (‘Equities’), and M&G proprietary
listed infrastructure universe (‘Listed infrastructure’), from 1 January 2010 to 31 December 2016. Cash based on ECB interest rates as at 31 August 2018.
Past performance is not a guide to future performance Volatility
Historical yield vs volatility payoff across asset classes
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
Yie
ld Fixed Income
Cash
Equities
Listed infrastructureDirect property
6
Commercial property and infrastructure vs other asset classesAsset class correlations
Source: Morningstar and M&G statistics. 31 January 2019.. FTSE 350 Real Estate Index, Index, FTSE All-Share Index, FTSE All-Stocks Gilt Index. Cash return is the 3-month LIBOR (Bank of England) Infrastructure
is FTSE Developed Core Infrastructure Index, RETIS; FTSE All-Share REITS Index
Low or negative correlation with other asset classes
Nov 2009 – Jan 2019 Cash Bonds Equities Direct property Infrastructure REITS
Cash 1.00
Bonds -0.06 1.00
Equities -0.05 -0.11 1.00
Direct property -0.01 -0.29 -0.29 1.00
Infrastructure 0.12 0.35 0.35 -0.17 1.00
REITS -0.01 0.04 0.04 0.19 0.21 1.00
7
Rounding up or down?
Diversification
DiversifyingAssets
– Fixed income
– Commodities
– Alternatives
The balance changes over time
Growth
Real Assets
– Equity
– Property
– Infrastructure
8
The shape of things to come!
Commercial property – what shape is it in?
M&G, helping you to be ship shape
9
The case for bricks & mortar
Source: MSCI IPD Monthly, December 2018
Diversification and downside protection
9.2% p.a. return for 32 years
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
1 year 3 years pa 5 years pa 10 years pa
% r
etu
rn
Total return Capital growth Income
IPD UK Commercial Property annualised total return composition
10
A global perspective
Source: Colliers International, Hodes Weill October 2017
Global allocation to property
And 1% equates to $700B!
8.9
9.3
9.6
9.9
10.1
10.3
8.0
8.5
9.0
9.5
10.0
10.5
2013 2014 2015 2016 2017 Expected 2018
%
Weighted average target allocation to real estate, all institutions
11
UK and London in good shape
Source: JLL, Q3 2018
London has greatest activity and cross-border investment
UK domestic investors still competing with overseas capital
Rank YTD 2017 Rank YTD 2018 City YTD 2018 (US$bn)
1 1 London 24.7
3 2 New York 23.6
10 3 Seoul 17.2
4 4 Paris 16.3
8 5 Hong Kong 16.2
5 6 Tokyo 14.7
2 7 Los Angeles 13.4
11 8 Shanghai 11.4
16 9 Chicago 10.1
9 10 Washington DC 9.2
Most active cities
12
UK and London in good shape
Source: JLL, Q3 2018
London has greatest activity and cross-border investment
UK domestic investors still competing with overseas capital
0 2 4 6 8 10 12 14 16 18
Brussels
Munich
Tokyo
Los Angeles
Washington DC
Hong Kong
Frankfurt
Paris
New York
London
US$ billions
YTD 2018 YTD 2017
10 largest recipient cities of cross-border investment
13
Healthy spread protects property from significant upwards pressure on yields
IPD Equivalent Yield Vs. 10-year Government Bond Yield
A parallelogram? (not quite)Property offers significant premium versus bonds
Source: Bloomberg, MSCI/IPD January 2019
-1
0
1
2
3
4
5
6
7
8
9
10
11
Yie
ld (
%)
Yield Spread UK 10-year Government Bond Yield IPD All Property Equivalent Yield
14
From a sales angle
Source: Property Data, 18 January 2019. Image source: By Cletzrodt - Own work, Public Domain, https://commons.wikimedia.org/w/index.php?curid=8910812
Transaction volumes remain buoyant
Overseas still active, domestic institutions net buyers
0%
10%
20%
30%
40%
50%
60%
0
10
20
30
40
50
60
70
80
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
£b
n
Q1 Q2 Q3 Q4 % of overseas investors (RHS)
15 year average: £47bn
£60.2bn
£65.5bn
15
UK – the circle of virtue?
Source: Property Data, 28 January 2019
Transaction volumes remain buoyant
£2.5bn
Scotland
£0.8bn
North East
£3.8bn
North West
£2.0bn
Yorkshire & Humber
£1.7bn
East Midlands£1.7bn
East of England£2.6bn
Wast Midlands
£0.8bn
Wales
£2.0bn
South West
£4.6bn
South East
£18.5bn
Central London £126.9bn
Greater London
16 Source: PMA, Winter 2018. Image source: By Alex1ruff - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=48367982
Property – the building blocks…Construction activity below long-term average
0
10
20
30
40
50
60
70
Co
mp
leti
on
s (
mil
lio
n s
q f
t)
Industrial Retail Offices Historic average '00-'17
Forecast
17 Source: CBRE 31 December 2018. Image source: By Bruno Girin from London, United Kingdom - Temptation, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=5500835
The shapes of Quality StreetRent rises are broadly supportive
2 2+
Quality is the sweet spot!
Offices
90
95
100
105
110
115
120
125
130
Jun
-14
Dec-1
4
Jun
-15
Dec-1
5
Jun
-16
Dec-1
6
Jun
-17
Dec-1
7
Jun
-18
Dec-1
8
Ren
tal
Gro
wth
In
dex (
Marc
h 1
4 =
100
Prime Secondary
Industrials
90
95
100
105
110
115
120
125
130
Jun
-14
Dec-1
4
Jun
-15
Dec-1
5
Jun
-16
Dec-1
6
Jun
-17
Dec-1
7
Jun
-18
Dec-1
8
Ren
tal
Gro
wth
In
dex (
Marc
h 1
4 =
100
Prime Secondary
Retail
90
95
100
105
110
115
120
125
130
Jun
-14
Dec-1
4
Jun
-15
Dec-1
5
Jun
-16
Dec-1
6
Jun
-17
Dec-1
7
Jun
-18
Dec-1
8
Ren
tal
Gro
wth
In
dex (
Marc
h 1
4 =
100
Prime Secondary
18
CBRE Property Valuation Capital Growth, Index June 16 = 100
Source: CBRE December 2018
Retail capital values could be in bad shape…Ongoing polarisation
65
70
75
80
85
90
95
100
105
Ca
pita
l G
row
th In
de
x (
Ju
n1
6 =
10
0)
Secondary Prime
65
70
75
80
85
90
95
100
105
Ca
pita
l G
row
th In
de
x (
Ju
n1
6 =
10
0)
Secondary Prime
65
70
75
80
85
90
95
100
105
Ca
pita
l G
row
th In
de
x (
Ju
n1
6 =
10
0)
Secondary Prime
Shops Shopping centresRetail warehouses
19
Retail - No longer (square) window shopping?
Source PWC Consumer Insights Survey, 2018. Note: Base 22,481 (Chart represents percentage of daily and weekly usage combined). Image sources: By 玄史生 - Own work, CC0,
https://commons.wikimedia.org/w/index.php?curid=68955382. By Vicki Nunn - Own work, Public Domain, https://commons.wikimedia.org/w/index.php?curid=12048968
Meeting consumer expectations
How often do you buy products using the following shopping channels?
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
In-store Mobile2013 2018
42%44%
7%
17%
20
Retail – back in its box? True value of stores, excluding food & grocery
Source: Global Data, April 2018
2023 estimated, all figures are £bn
144.8
9.25.9
15.5
25.8
1.4
Store sales
Click & collect Online browsed instore
Online not browsed instore
Online pureplays
Offline remote
71.5%
28.5%
Online sales need physical presence
21
Retail – It’s all gone pear-shaped??
Source: M&G, December 2018
c.£14m
-20.0% in 2018
c.£95m
+0.2% in 2018
Riverside Retail Park, NorthamptonDebenhams at The Moor, Sheffield
Retail portfolio: 64% prime, 23% good secondary and 13% secondary
22
Industrials - Squaring up to the rest?
Source: Bloomberg, 5 March 2019. Image source: By Bill Harrison, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=13907321
Industrials and alternatives trading at a premium to NAVREIT share price index
Industrials /
Alternatives
Balanced/
C London
Retail
30
40
50
60
70
80
90
100
110
120
130
140
150
160
Sh
are
Price
, In
de
x 0
1/0
1/2
01
7 =
10
0
Intu British Land Segro Great Portland Estates Unite Group
23
Offices - Blocks on blocks…Supply shrinking
Source: PMA, 31 December 2018, JLL Office Market Report Q2 2018. Image source: By A. Drauglis Furnituremaker - Flickr: Spalted Maple versus Obeche, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=19142296
0
1
2
3
4
5
6
7
8
2016 2017 2018
Mill
ions s
q ft
Development starts
Speculative at start Pre-let at start
24
You can’t put square pegs in round holes…
Source: MSCI Quarterly Universe, as at end December 2018.
‘Other’ sector becoming more important
% of ‘other’
sectorOther as % of
All Property
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Leisure All Resi Healthcare Hotels Other (unaccounted for) Other as % of all property
A bit of the ‘other’
25
Having a ball with predictions…
Source: M&G Real Estate forecasts as at January 2019, IPF October 2018 . Image source: By W.carter - Own work, CC0, https://commons.wikimedia.org/w/index.php?curid=66482993
M&G RE UK commercial property total return forecasts
7.5
3.5
5.14.9
4.3 4.0
-2
0
2
4
6
8
10
12
2018 2019 2020 2021 2022 2023
IPD
All P
rop
ert
y P
erf
orm
an
ce
(%
per
an
nu
m)
Income return Capital growth Total return Total return IPF
26 Source: M&G, September 2018
Summary
• Property funds offer a secure income
• Physical property remains a great diversifier
• Property fundamentals remain resilient
• Income key driver of returns in the medium term
Property shaping up
27
The shape of things to come!
Commercial property – what shape is it in?
M&G, helping you to be ship shape
28
Transportation of the future Renewable energy Universal connectivity
Water & waste managementUrbanisation Social & demographic shifts
Everything changes but everything stays the same…
Source: M&G, 2019. Image sources: By Doug Falconer - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=15383965. By Rupert Fleetingly, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=9206027. By BlueBreezeWiki - Own work, CC BY-SA 3.0,
https://commons.wikimedia.org/w/index.php?curid=35665428. By diddi4 - https://pixabay.com/de/grillen-holzkohle-grill-glut-hei%C3%9F-386602/ archive copy at the Wayback Machine (archived on 18 October 2014), CC0, https://commons.wikimedia.org/w/index.php?curid=57215319. By Clivejb - Own work, CC BY-SA 3.0,
https://commons.wikimedia.org/w/index.php?curid=25178264. By Alf van Beem - Own work, CC0, https://commons.wikimedia.org/w/index.php?curid=45179900. By Early color photograph created by Sergei Mikhailovich Prokudin-Gorskii as part of his work to document the Russian Empire from 1909 to 1915. - This image is available from the United
States Library of Congress's Prints and Photographs divisionunder the digital ID prokc.20739.This tag does not indicate the copyright status of the attached work. A normal copyright tag is still required. See Commons:Licensing for more information., Public Domain, https://commons.wikimedia.org/w/index.php?curid=2436455. By Hassocks5489 - Own
work, CC0, https://commons.wikimedia.org/w/index.php?curid=64420317. By Ashley Felton - Own work, Public Domain, https://commons.wikimedia.org/w/index.php?curid=1566902. By July0725 - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=34144036. By Galt Museum & Archives on The Commons -
https://www.flickr.com/photos/galt-museum/7694056496/, No restrictions, https://commons.wikimedia.org/w/index.php?curid=53460771
The changing shape of our world
Infrastructure for our fast-changing world
29
Past Turnpike Trust Act,1738
A timeless innovation
Image sources: Shutterstock. By J. Cary - Old London Maps at http://www.oldlondonmaps.com/viewspages/0462.html, Public Domain, https://commons.wikimedia.org/w/index.php?curid=6753356; By Unbekannte Autoren und Grafiker; Scan vom
EDHAC e.V. - Sammlung eines Mitglieds des Ersten Deutschen Historic-Actien-Clubs e.V. (EDHAC e.V.); (kl), Public Domain, https://commons.wikimedia.org/w/index.php?curid=65160295; By Famartin - Own work, CC BY-SA 4.0,
https://commons.wikimedia.org/w/index.php?curid=72993667. By The original uploader was Dumelow at English Wikipedia.(Original text: W Raddon) - http://www.rcahms.gov.uk/presarch.html, Public Domain,
https://commons.wikimedia.org/w/index.php?curid=3602879. By Chris Sampson - TURNPIKE LANE-06 240710 CPS, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=32099232. Public Domain,
https://en.wikipedia.org/w/index.php?curid=15533011
Wheels of change…
30
Wheels of change…
Images source: By Unbekannte Autoren und Grafiker; Scan vom EDHAC e.V. - Sammlung eines Mitglieds des Ersten Deutschen Historic-Actien-Clubs e.V. (EDHAC e.V.); (kl), Public Domain,
https://commons.wikimedia.org/w/index.php?curid=65160295. By Famartin - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=72993667
The Philadelphia Turnpike
Seriously enduring assets that can generate inflation-beating returns
Pennsylvania
Turnpike
revenue in 2018
$1.2 billion
+ dividend
yield
1795 2018
31
Moving in different circles - renewable energy
Source: Bloomberg, January 2019. Image sources: By Pdfpdf at en.wikipedia, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=17839375. By Earl Morter - IEEE Global
History Network and Consolidated Edison Company of New York, Public Domain, https://commons.wikimedia.org/w/index.php?curid=8016148
America’s oldest surviving listed infrastructure company
Seriously long-term returns fuelled by consistent dividend growth
Gas light in C19
1884 2018
Consolidated Edison
revenue in 2018
$12.2 billion
+ dividend
yield of 3.8%
32
Infrastructure demands are growing
Image sources: By Aliciak3yz / Wikimedia Commons, CC BY-SA 4.0 , https://commons.wikimedia.org/wiki/File:Katy-Freeway.jpg, By Chris 73 / Wikimedia Commons, CC BY-SA 3.0,
https://commons.wikimedia.org/w/index.php?curid=1758516, Gettyimages.
Transportation needs spiralling out of control
We are struggling to cope with our growing needs
33
Infrastructure demands are growing
Source: M&G, Bank of America Merill Lynch, 2018 (LHS); Bloomberg New Energy Finance, 2016 (RHS)
Renewable energy addressing global issues
Demand up
Warming at current
emissions trajectory
5
4
3
2
1
0
4oc5
4
3
2
1
02oc
Tolerable level of warming
$14.1tr
Required
investment in
renewables to 2040
Lynchpin of climate change solutions
34
Infrastructure demands are growing
Source: M&G, Bank of America Merill Lynch, 2018 (LHS); Bloomberg New Energy Finance, 2016 (RHS)
Renewable energy addressing global issues
66%
Solar
47%
Onshore wind
71%
Offshore wind
What will drive their adoption?Estimated cost decrease of different renewables to 2040
Costs down
35
Infrastructure gap – suffers from chronic underinvestment
Source: US Bureau of Economic Analysis, 30 September 2018; American Society of Civil Engineers, 2017 Infrastructure Report Card
Government spending is at a 70-year low
0%
1%
2%
3%
4%
5%
6%
4.95%
1.40%
US gross federal investment as a % of GDP
36
Infrastructure gap – a hole load of stats…Geographic split of investment needs
Source: McKinsey, Bridging infrastructure gaps: Has the world made progress? October 2017
Emerging markets account for nearly two-thirds of demand
Other
EM30%
North
America20%
Western
Europe10%
China34%
37
Ever increasing circles?
Source: M&G, 2018 *Expected annual dividend increase, for illustrative purposes only
Expanding the universe to capture long-term growth
A stable, dependable foundation…..augmented by growth
Ind
us
try &
su
b-i
nd
us
try
Div
ide
nd
pro
file
*
Health Education Civic
Hospitals Schools Government
State care Universities Security
Student housing
Communication Transactional Royalty
Towers Payments Energy
Data centres Exchanges Mineral
Optical networks
Satellite
Infrastructure class
Economic (65-75%) Social (10-20%) Evolving (15-25%)
Utility Energy Transport
Electricity Pipelines Toll roads
Natural gas Terminals Railways
Renewables LNG Airports
Water Ports
Waste Public transit
38
Fair and square
Source: M&G, Bloomberg, 30 November 2018. Valuation measure is 6-month moving average of EV/EBITDA ratio. Image source: By U.S. Air Force photo/Airman 1st Class Nadine Y. Barclay - NELLIS AIR
FORCE BASE website - Solar panels connect to base electric gridorignial image, Public Domain, https://commons.wikimedia.org/w/index.php?curid=3268675.
Valuations
Economic infrastructure looks particularly attractive
EV
/EB
ITD
A R
atio
Valuation by infrastructure class
8
10
12
14
16
18
20
22
24
Social Economic Evolving
39
Infrastructure – a diamond in the rough?
Source: M&G, PCR team, 25 August 2017. Image source: By Angela - Self-photographed, Public Domain, https://commons.wikimedia.org/w/index.php?curid=3770199
Listed infrastructure provides clear risk/return benefits
The longer the holding period, the more pronounced the effect
14
16
18
20
0
2
4
6
8
10
12
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Vo
lati
lity
%
Re
turn
%
Return (LHS) Risk (RHS)
Past performance is not a guide to future performance
Increased allocation to listed infrastructure
M&G’s infrastructure universe vs MSCI AC World (10 years)
40
The infrastructure universe is shaping up!
Source: Factset, 30 June 2017 *As at 31 January 2017. **As at 27 October 2017
Higher yield vs global equities
0%
1%
2%
3%
4%
5%
6%
7%
8%
M&G's Infra Universe MSCI AC World
Past performance is not a guide to future performance
Yield: M&G’s infrastructure universe vs MSCI AC World
41
The infrastructure universe is shaping up!
Source: Factset, 30 June 2017 *As at 31 January 2017. **As at 27 October 2017. Image source: By Matěj Baťha - Own work, CC BY-SA 2.5, https://commons.wikimedia.org/w/index.php?curid=1605008
Lower volatility and drawdown vs global equities
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
0.1
M&G's Infra Universe MSCI AC World
Past performance is not a guide to future performance
Drawdown (in USD)**
Gets back into shape quicker!
42
Infrastructure index Constituents Utilities Energy Telecom services Transport
FTSE Core Infrastructure 149 56% 11% 1% 25%
FTSE Core Infrastructure 50/50 227 48% 11% 1% 32%
S&P Global Infrastructure 75 39% 18% 0% 43%
MSCI ACWI Infrastructure 262 41% 9% 42% 4%
Macquarie Global Infrastructure 241 80% 12% 0% 7%
More like a square peg in a round hole?
Source: Provider factsheets, 31 August 2017
An active approach is essential: infrastructure indices are flawed
Highly concentrated with bond-proxy performance
43
Tomorrow’s world – the stars of the future
Source: M&G, 2019. Image sources: By BigRiz - http://en.wikipedia.org/wiki/File:Fibreoptic.jpg, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=23946204. By NASA Glenn
Research Center / Electrochemistry Branch - Polymer Energy Rechargeable System (PERS) at the Wayback Machine (archived on 26 January 2011), Public Domain,
https://commons.wikimedia.org/w/index.php?curid=67525368. By User JakeLM on en.wikipedia - teepi, CC BY 2.5, https://commons.wikimedia.org/w/index.php?curid=960944
Technology is constantly evolving
Who are going to be the winners and losers?
Hydrogen infrastructure Magnetic levitation5G rollout Ultra high-speed fibre
44
Infrastructure – we’ve come full circle
Source; M&G, January 2018. Image source: By David Stowell, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=9322261
Summary
A long-term strategy to deliver long-term solutions
Unique asset class with
compelling characteristics
Rising income backed by
structural growth and inflation-
protected revenues
Modern and
differentiated approach
45
Learning outcomes
Present
the case for Commercial
Property and Global
Infrastructure as a
diversifying asset in a
modern portfolio or
investment solution
Explain
the performance of
Commercial Property post
Brexit vote, the liquidity
concerns and the prospects
beyond Brexit
Describe
the characteristics and
attractions of Global
Infrastructure and consider
its place as part of a well-
diversified portfolio
46
The shape of things to come!
Commercial property – what shape is it in?
M&G, helping you to be ship shape
47
M&G Property Portfolio
Risks associated with this fund
The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as rise.
There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.
The fund is valued daily on both an ‘offer’ basis (how much its assets would cost to buy) and a ‘bid’ basis (how much the fund would receive if assets were sold). The
difference between the two is known as the ‘spread’, which is currently around 6.25%.
The fund invests mainly in one type of asset. It is therefore more vulnerable to market changes for that specific type of asset. This type of fund can carry a higher
risk and can experience bigger price gains and falls when compared to a fund which invests in more types of assets.
If significant numbers of investors withdraw their investments from the fund at the same time, the manager may be forced to dispose of property investments. This
may result in less than favourable prices being obtained in the market for those
investments.
Property valuations are provided by an independent valuer and are subject to the judgement of the valuer.
Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in the
fund’s shares.
The fund manager will place transactions, hold investments and place cash on deposit with a range of counterparties (opposite parties). There is a risk that
counterparties or tenants of properties may default (fail to pay) on their obligations or become insolvent.
All of the above risks could have an adverse effect on the value of your investment.
For any performance shown, please note that past performance is not a guide to future performance.
48
Income quality
Source: IPD Iris Report, June 2018 vs MSCI Quarterly Universe
Tenant mix
Top Upper Lower Bottom
Fund quartiles from safest (green) to riskiest (orange)
Unexp'd lease term
Rent expiring < 5 yrs
Vacancy rate
Overrenting
Top 10 companies
Low risk companies
High risk companies
Weighted risk score
49
Income quality
Source: IPD Iris Report, June 2018 vs MSCI Quarterly Universe
Tenant mix
Q1 2018
Fund percentile rank 26.9
Index percentile rank 45.9
Fund Index Index weighted average
Lower riskPercentile rank
Higher risk
0
40
20
60
80
100
0 25 50 10075
Ris
k s
co
re
Ranking of weighted risk score
50
PerformanceIn sterling
Source: Morningstar, Inc., 31 January 2019, sterling I class units, net income reinvested, price to price
Past performance is not a guide to future performance
• Price swings distort data
• Peer group influenced by holdings in securities
Performance1 year
%
3 years
% pa
5 years
% pa
M&G Property Portfolio 3.6 1.0 5.0
(IA) UK Direct Property Sector 2.6 3.1 5.4
Performance2019 YTD
%
2018
%
2017
%
2016
%
2015
%
2014
%
M&G Property Portfolio 0.1 4.2 6.9 -7.1 8.9 14.4
51
M&G Global Listed Infrastructure Fund
Risks associated with this fund
The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as
rise. There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.
Changes in currency exchange rates will affect the value of your investment.
The fund holds a relatively small number of investments and, as a result, may experience larger price rises and falls than a fund which holds a larger number
of investments.
The fund will invest in emerging markets which are generally more sensitive to economic and political factors, and where investments are less easily bought
and sold. In exceptional circumstances, the fund may encounter difficulties when selling or collecting income from these investments, which could cause the
fund to incur a loss. In extreme circumstances, it could lead to the temporary suspension of dealing in shares in the fund.
Convertibles are subject to the risks associated with both bonds and company shares, and to risks specific to the asset class. Their value may change
significantly depending on economic and interest rate conditions, the creditworthiness of the issuer, the performance of the underlying company shares and
general financial market conditions. In addition, issuers of convertibles may fail to meet payment obligations and their credit ratings may be downgraded.
Convertibles may also be less liquid than the underlying company shares.
Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in
the fund’s shares.
Some transactions the fund makes, such as placing cash on deposit, require the use of other financial institutions (for example, banks). If one of these
institutions defaults on their obligations or becomes insolvent, the fund may incur a loss.
For any performance shown, please note that past performance is not a guide to future performance.
It is also important to note that
The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or cash.
52
Calendar year performance in sterling
Source: Morningstar Inc., UK database, 22 February 2019, sterling I class shares, income reinvested, price to price
2018
%
2017
%
2016
%
2015
%
2014
%
M&G Global Listed Infrastructure Fund 1.1 N/A N/A N/A N/A
MSCI ACWI Index -3.3 13.8 29.4 3.8 11.2
Past performance is not a guide to future performance
M&G Global Listed Infrastructure Fund
Past performance is not a guide to future performance
Number 1 in the sector over 1 year
3 months
%
6 months
%
YTD 2019
%
1 year
%
M&G Global Listed Infrastructure Fund 7.9 4.7 10.1 19.6
MSCI ACWI Index 4.6 -2.9 8.2 6.5
53
For financial advisers only. Not for onward distribution. No other persons should rely on any information contained within. This financial promotion is issued by M&G Securities Limited which is authorised
and regulated by the Financial Conduct Authority in the UK and provides ISAs and other investment products. The company’s registered office is Laurence Pountney Hill, London EC4R 0HH. Registered in England
No. 90776.