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M&G Investments is offering shareholders in its £206m Income investment company the choice of rolling over into another of its income vehicles, taking a cash exit, or transferring into one of M&G's open-ended funds, as the wind-up date approaches.

The fund, which was launched nearly seven years ago, is due to wind up on 31 October.

M&G has selected the £69m High Income trust, which will run until March 2017, as the rollover vehicle. Both investment companies are managed by the same team at M&G and are split-capital investment companies.

The firm is now canvassing shareholder and adviser opinion over which open-ended vehicle would be most suitable, and which of the three options investors are expected to select.

The final details will be published later on in the summer.

A spokesman for M&G said the High Income trust had been selected because its investment objective - increasing income and capital growth - was very similar to the Income vehicle, and it had a good long-term track record.

Nick Evans manages the equity component of the Income fund, while Richard Woolnough and Jim Leaviss cover the bond element. The High Income trust meanwhile is managed by Richard Hughes.

Both funds were hit by the recent turbulence in the markets, particularly the fall out from Northern Rock in the financials sector, which makes up such a large proportion of the equity income space.

In the most recent interim report for the High Income fund, Mr Hughes acknowledged the fund's "relatively large position in banks" had hurt performance.

"While we did not hold Northern Rock, the portfolio was not immune to contagion within the mortgage sector," he said. "We believe Alliance & Leicester and Bradford & Bingley have better business models than Northern Rock."

The manager added: "While our holdings in the larger banks – Barclays and Royal Bank of Scotland Group – also suffered, we believe that their strong global presence provides some protection from weakness in the UK market."

The High Income fund has returned 28.51 per cent over three years to 20 June, compared with the AIC's UK High Income sector average of 16.13 per cent, according to Morningstar. The Income fund has fallen 6.73 per cent over the same period.

Meanwhile M&G's open-ended Income fund has returned 11.45 over the same period, while the IMA's UK Equity Income sector saw an average return of 17.08 per cent.