For more information on the financial terms used in this page, please consult the glossary.
Choosing the right mix of asset classes
To build an investment portfolio that suits you, it's important to understand how different asset classes can help manage risk and grow your investments over time.
Generally speaking, if you’re willing to take more risk with the goal of achieving a higher level of return from your investment, your portfolio may hold more company shares (also referred to as equities).
As you grow older, your appetite for risk will probably decrease, and the general rule of thumb has traditionally been that the percentage of bonds you hold is likely to increase. However, a reasonable asset mix for you will also depend on other factors.
You may want to increase the percentage of bonds you hold if:
- your priority is to have a less volatile investment, for example in the run up to retirement
- you’re comfortable with lower growth potential in order for your investment to have the potential to generate a more predictable income
No asset class is free from risk. Using the different characteristics of each asset class in a balanced portfolio can help to smooth fluctuations in performance and balance risk.
Building block funds vs stand-alone funds
To further help you decide which funds are appropriate for your needs you should consider whether you would prefer investing in our building block funds or stand-alone funds.
Funds within the equities and fixed income (also referred to as bonds) asset classes are what we consider 'building block' funds. Funds within these asset classes should be held as part of a wider investment portfolio. In other terms you should consider creating a ‘diversified portfolio’, where an investment portfolio is spread across a blend of asset classes like equities and bonds. As different asset types are likely to perform well at different times and in different market conditions, investing in a good mix means you won't have ‘all your eggs in one basket’ and could mean more consistent returns over the long term too.
Our multi-asset funds are what we class as 'stand-alone' funds. You can hold these funds individually, and not necessarily as part of a wider investment portfolio. Multi-asset funds spread your money across different asset types so you don't have ‘all your eggs in one basket’, offering you an off-the-shelf solution if you’re looking for diversification in one investment.
Find out more about diversification in our handy M&G Guides.
Understanding our funds
At M&G, understanding is at the heart of what we do. Here we explain a little more about each asset class to help you decide which fund or funds might be right for you.
Sustainability
Your financial choices help to shape the world we live in. Some of the money you invest has the potential to fund something better: for people, for communities, and for the planet.
Multi-asset
Multi-asset funds typically invest across a range of assets, thereby offering investors a mix of equities, fixed income securities, cash and currencies in a single portfolio.
Equities
Equities are shares of ownership in a company. Over the long term, investing in equities has the potential to generate higher returns, which could help you meet your investment objectives.
Fixed income (bonds)
Fixed income securities, also known as bonds, potentially offer a more predictable income for investors when compared to riskier asset classes, such as equities, and could help to bring an important element of diversification to your investment portfolio.
Share classes
For the majority of M&G funds, investors can choose between three share classes. Each share class has been designed with different investment needs in mind.
Understanding our charges
We believe it is important that you understand our charges when you invest with us.
Fund charges
Our charges vary between the funds that you can invest in, and then by the class of share you might hold. The more you invest in a fund, the lower your charges will be as a percentage of your investment.
Fund charges calculator
Our calculator can help you see the amount of charges, in pounds and pence, you might expect to pay on the different funds in our range. Please note that this tool is for guidance only and charges are subject to change.
Annual value assessment
Our annual assessment of the value provided to investors in each of M&G’s UK-based funds is designed to help you to see whether M&G’s charges are justified in the context of the overall service we deliver.
Before selecting funds you should read an up-to-date version of your chosen fund's 'Key Documents': Key Investor Information Document (KIID), Prospectus and, for funds with sustainability characteristics or with a sustainability label, the Consumer-Facing Disclosure (CFD). These can be found on each fund page and provide important information to help you understand the funds. The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser. The views expressed here should not be taken as a recommendation, advice or forecast.