LM founder and chief executive Peter Drake said the move represented a "significant milestone" since the Global Financial Crisis (GFC) prompted the freezing of a number of mortgage funds as unitholders - spooked by Australian Government pledges to only guarantee deposits in banks and building societies - headed for  the exits.

"Freezing the fund was in fact the best management decision we made," Drake said.

"When you ‘freeze' something, whatever it may be, you do so in order to preserve its full benefits for a time in the future."

Drake said the freeze enabled the fund to remain intact and allowed them to "strategically manage through the panic, and ultimately, to preserve the full capital value."

The first step towards reopening for new investment will be the sale of A$200 million of the fund's assets, a move that will allow it to recommence lending this year.

Drake said the sale would reduce holding costs and alleviate much needed investor liquidity in  the form of capital and interest distributions.

LM Investments communications manager Michelle Ballard said the company would embark on an "intensive sales and marketing campaign, not a fire sale," a point reiterated by Drake who said they intended to achieve the highest price possible for the assets.

No date has been set for the fund to reopen for new investment, and according to the Morningstar co-head of research, Chris Douglas, attracting that investment may be "a tough sell."

He believes the company would have "come under tremendous pressure to unfreeze it, at some stage they have to get back to giving money back to investors."

Ballard dismissed fears investors may be reluctant to commit to the newly unfrozen fund, citing the similar LM Income Fund which she said had been successfully attracting new money.

She also said investors and advisers had been updated regularly during the funds hibernation.

"I don't think there will be any resistance," she said.