M&G (Lux) Global Maxima Fund performance – Outperforming the global equity market over 5 years

4 min read 5 Feb 25

Key points

  • Over the past 5 years, the M&G (Lux) Global Maxima Fund has combined human expertise and machine intelligence, with AI-based stock-picking recommendations enhancing our investment decision-making.
  • The fund’s blend of AI capabilities and human oversight has delivered successful decisions and outcomes: it has outperformed its benchmark index, the MSCI ACWI Net Return Index, over the 5 years since inception.
  • AI is here to stay and we remain committed to leveraging AI's potential in investment decision-making while applying careful management and expertise for optimal results.

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested. Past performance is not a guide to future performance.

Combining human expertise and machine intelligence

In December 2024, we reached the 5-year anniversary of the launch of the pioneering M&G (Lux) Global Maxima Fund. This milestone provides an opportunity to reflect on the fund’s remarkable journey in combining human expertise and machine intelligence to achieve its investment objective and outperform the global equity market over five years.

The fund leverages advances in artificial intelligence (AI), data science and computer processes to provide stock-picking recommendations. The fund’s AI-driven approach builds on the foundation of an earlier M&G AI-based machine learning strategy, which was conceived in 2017. After building the team, launching the first prototype and testing it for a year, we officially launched the fund in December 2019.

Five years on, we’re now running the fourth version of the model. The team has grown from two to five investment professionals, with significant technical and infrastructure support and our assets under management have surpassed one billion US dollars1.

Beyond the hype: AI is here to stay

We understand that, as AI continues to transform the investment landscape, investors are eager to understand how this technology is impacting the decision-making process and reshaping the role of human investment professionals. With AI becoming increasingly ubiquitous and large language models like ChatGPT hitting the mainstream in a dramatic way, there’s no shortage of buzz surrounding the theme of AI.

However, we view AI as more of an evolutionary development. As such, we feel that, with a diligent approach to implementing AI techniques, we’re able to produce differentiated outcomes. That said, it is important to remain cautious in the application of AI, as not every problem is well suited to the use of AI in its solution.

AI is undoubtedly here to stay, in our opinion, driven by three key factors: the evolution of modelling techniques, the growth in computational power and the explosion of available data. With an estimated 90% of the world’s data being created in the last two years, we believe AI’s role in asset management will continue to grow more central to investment decision-making.

AI and the M&G (Lux) Global Maxima Fund

AI-based decision-making is at the heart of our investment process. Our approach mirrors the traditional investment process — collecting data, modelling it, making predictions and constructing a portfolio — but it does so at scale, without the biases often associated with human decision-making. It enables us to access useful information from text, images and sound, enhancing our investment decision-making. As AI techniques develop, we continually explore new methods to refine our models.

We use historically representative data from the investment landscape to train our AI model, enabling it to learn underlying patterns and provide us with a rich view of the market. These models not only help us predict investment outcomes but also deepen our understanding of how market factors interact.

We believe the value of these AI-derived insights and the effectiveness of our investment process are demonstrated by the investment outcomes we have achieved. Over the past 5 years, the fund has repeatedly outperformed its benchmark, the MSCI All Country World Net Return Index, in both falling and rising markets. 

On a cumulative basis, since its launch in December 2019 to the end of 2024, the fund has delivered a total return of 72.4% in US dollars, more than 5 percentage points ahead of its benchmark, which has returned 66.6% over the same period. We believe this achievement is notable, especially considering the challenging environment for global equity managers; the fund’s peers underperformed, on average, by an annualised 400 basis points during the same period. At the end of December 2024, the M&G (Lux) Global Maxima Fund ranked in the top quartile for performance over one and three years and in the top decile over five years2.

M&G (Lux) Global Maxima Fund performance – Outperforming the global equity market over 5 years

Past performance is not a guide to future performance

Cumulative returns since inception*

Source: Morningstar Inc., 31 December 2024. Morningstar Wider Universe, USD A class shares, income reinvested, price to price. Benchmark returns stated in USD terms. Returns may increase or decrease as a result of currency fluctuations. Rebased to 100 at 11 December 2019. *Fund was launched on 11 December 2019. 
M&G (Lux) Global Maxima Fund – Performance since inception in December 2019

Past performance is not a guide to future performance.

Rolling period performance (%) Year to end of MRQ5 1 Month 3 Months 6 Months 1 Year 3 Years
% pa
5 Years
% pa
FMT6
% pa
Gross – USD A Acc 17.7 -1.7 3.5 10.3 17.7 6.9 13.1 13.1
Net – USD A Acc 15.4 -1.8 3.0 9.2 15.4 4.8 10.9 11.4
Benchmark3 17.5 -2.4 -1.0 5.6 17.5 5.4 10.1 10.6
Sector4 7.0 -3.5 -4.4 1.9 7.0 -0.5 5.9 6.3
Quartile Ranking 1 1 1 1 1 1 1 1
Calendar year performance (%) 2024
%
2023
%
2022
%
2021
%
2020
%
2019
%
2018
%
2017
%
2016
%
2015
%
Net – USD A Acc 15.4 20.3 -17.0 22.2 19.3          
Benchmark3 17.5 22.2 -18.4 18.5 16.3 26.6 -9.4 24.0 7.9 -2.4
3 The fund’s benchmark is the MSCI ACWI Net Return Index. The benchmark is a comparator against which the fund’s performance can be measured. It is a net return index which includes dividends after the deduction of withholding taxes. The index has been chosen as the fund’s benchmark as it best reflects the scope of the fund’s investment policy. The benchmark is used solely to measure the fund’s performance and does not constrain the fund's portfolio construction. The fund is actively managed. The investment manager has complete freedom in choosing which investments to buy, hold and sell in the fund. The fund’s holdings may deviate significantly from the benchmark’s constituents.
4 Morningstar Global Flex-Cap Equity sector;
5 Year to end of Most Recent Quarter: 31 December 2024;
6 Start of Fund Manager Tenure: 11 December 2019.
Source: Morningstar Inc., 31 December 2024. Morningstar Wider Universe, USD A class shares, income reinvested, price to price. Benchmark returns stated in USD terms. Returns may increase or decrease as a result of currency fluctuations.

Combining the potential of humans and machines

We feel that the real benefits of our AI approach come from blending the strengths of both humans and machines. The model excels at identifying patterns and nuances in the data that are indistinguishable to human beings, in our view. It also operates at a speed and scale that would be impossible for humans alone. The model is also emotionless, which helps mitigate biases, such as overconfidence or fear, that can distort human decision-making.

However, human judgment is crucial for addressing areas where AI models can’t always perform optimally. For example, humans can provide additional context to data, accounting for shifts in the market and filling in the gaps where the AI might be blind to certain qualitative factors. Every stock selected for our portfolio undergoes a human check before being added. We make sure that the things we’ve accounted for are correct and consider any critical factors that may not be captured within the model.

Looking to the future

We believe AI presents great possibilities for delivering exceptional outcomes for our clients. However, careful management and expertise are required to ensure optimal results. The key to success lies in the processes used to apply it and we remain committed to harnessing its power as its full potential unfolds over time.

Fund description

The fund aims to provide a combination of capital growth and income that is higher than the global equities market (as measured by the MSCI ACWI Net Return Index) over any five-year period. At least 80% of the fund is invested in the shares of companies from across the world. The investment manager carries out quantitative analysis of individual companies and uses proprietary data analysis and machine learning to identify securities that are expected to outperform the global equity markets. The fund’s recommended holding period is five years.

Main risks associated with this fund

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested. 

The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment. 

Investing in emerging markets 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. 

Investing in this fund means acquiring units or shares in a fund, and not in a given underlying asset such as building or shares of a company, as these are only the underlying assets owned by the fund. 

Further risk factors that apply to the fund can be found in the fund's Prospectus.

Find out more about the fund

 

1 The team’s assets under management comprise a number of mandates for internal and external clients that follow the same investment process as the fund.
2 Source of performance: Morningstar Inc., 31 December 2024. Morningstar Wider Universe, USD A class shares, income reinvested, price to price. Peer group is the Morningstar Global Flex-Cap Equity sector.
By Michael Cook, Fund Manager

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. Past performance is not a guide to future performance.

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