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Fixed Income (Bonds)

We are one of Europe's largest bond investors, with a strong track record of active management across fixed income assets globally.

For more information on the financial terms used in this page, please consult the glossary.

Contents

What are bonds?

Fixed income securities, also known as bonds, are loans that are usually taken out by a government or company. They normally pay bondholders a set rate of interest over a given time period, at the end of which the amount borrowed, the principal, is repaid by the bond issuer. The regular interest payments, which are known as coupons, can provide investors with a predictable income stream over the life of the bond, until it matures. The price of a bond can vary over its life, meaning investors can also profit from any increase in its value if they sell before maturity.

Benefits of investing in bonds

Bonds can bring diversification to your investment portfolio. You've probably heard the term 'don't put all your eggs in one basket'. When it comes to investing we use this term in relation to asset classes. Bonds can help to spread investment risk and are often seen as a counterbalance to company shares within an investment portfolio.

Other benefits of investing in bonds include:

  • Potential income generation from regular interest payments.

  • Capital preservation, since bonds can be considered less risky in terms of losing value.

There are risks and considerations with investing in bonds:

  • Investments in bonds are affected by interest rates, inflation and credit ratings, and it's possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by a fund.

  • High yield bonds usually carry greater risk that the bond issuers may not be able to pay interest or return the capital.

  • Investing in emerging markets (countries in the process of catching up with developed economies, with rapid growth and increasing industrialisation) involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.

  • The value of your investment can go down as well as up so you might not get back the amount you put in. When you take money out and/or when we take a charge, this will reduce the value of your investment.

What do we do?

We have a proud history of managing bond funds for retail investors, often introducing specialist bond funds ahead of our rivals. In 1980, we launched the M&G Gilt and Fixed Interest Income Fund, a fund based around an expanding UK government bond market at the time. In 1994, we launched the M&G Corporate Bond Fund, aimed at the capturing value from a growing corporate bond market. In 1998, we launched the UK’s first retail high yield corporate bond fund, the M&G Global High Yield Bond Fund. These funds are all still going strong today.

Our established team of investment professionals aims to deliver performance over the long term across a range of fixed income products.

We manage a wide range of funds, covering the spectrum of global government and corporate bonds. 

How do we deliver?

We seek to identify the best relative and absolute value opportunities by taking advantage of the extensive and diverse experience across our investment teams and our large in-house team of credit analysts.

A focus on long-term performance allows investment teams to exercise conviction, while considering risk management at the same time.

Our range

While each fund differs in terms of its specific investment strategy, they can be grouped into different categories, according to their characteristics.

Building block funds

Funds within the equities and fixed income 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 words 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.

To help you easily identify our 'building block' funds you will see the following icon displayed on the fund pages of our building block funds.

Our fixed income funds

Fixed income strategies that can invest across a breadth of different assets, and are designed to perform across different market environments.

 

Fixed income strategies that invest mainly in investment grade corporate bonds globally, regionally or in specific markets. Investment grade bonds are those issued by companies with higher credit ratings, meaning they are considered to be at lower risk of default on their debts. Corporate bond yields may be higher and they can offer greater returns than government bond funds, but they potentially incur greater risk.

Fixed income strategies that invest mainly in government bonds globally or in specific markets. They potentially incur lower risk but may offer lower returns than corporate bond funds.

 

Fixed income strategies that invest mainly in high yield bonds globally. High yield bonds are those issued by companies with lower credit ratings, meaning they are considered to be at higher risk of default on their debts. They potentially incur greater risk but may offer higher returns than both government bond funds and investment grade corporate bond funds.

 

Fixed income strategies that invest mainly in bonds issued or guaranteed by governments of and companies based in, or doing most of their business in, emerging markets globally. Emerging markets are countries in the process of catching up with developed economies, with rapid growth and increasing industrialisation. Investments in emerging markets are generally considered to be riskier than those in developed markets.

 

Find out more about diversification in our handy M&G Guides.

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.

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