M&G (Lux) Global Floating Rate High Yield Fund

A defensive approach to high yield investing

Fund philosophy

• The M&G (Lux) Global Floating Rate High Yield Fund provides access to a globally diversified portfolio of high yield floating rate notes (FRNs) issued by companies or governments from anywhere in the world and denominated in any currency.
• Unlike conventional bonds – which typically suffer in a rising rate environment – FRNs pay a coupon which is automatically adjusted in line with interest rates, offering not only protection, but a way of benefiting from any future increase in interest rates.
• To help limit downside risks, the manager focuses on senior secured issues – a type of bond which provides a strong claim on a company’s assets in the event that it gets into financial difficulties.

High yield FRNs – designed to generate income without undue interest rate risk

How high yield floating rate notes work

Illustrative example: Providing an attractive income stream as interest rates rise

Source: M&G, 2022. For illustrative purposes only. Assumes no change in credit spread. *Floating rate coupon automatically adjusted in line with changes in interest rates.

Reasons to invest

• Focusing on FRNs issued by high yield companies, this innovative fund is designed to provide income while minimising the negative impact of rising interest rates.
• High yield FRNs can also provide a relatively defensive approach to high yield investing and have typically exhibited lower volatility than conventional high yield bonds.
• Careful bond selection is based on a thorough analysis of individual credits, with the fund manager supported by a large and experienced team of analysts.

Fund facts

31 July 2022	€2.193,99 million
Fund launch date	13 September 2018
Benchmark*	ICE BofAML Global Floating Rate High Yield 3% Constrained (EUR Hedged) Index
Sector	Morningstar Global High Yield Bond – EUR Hedged sector

EUR A-H share class
ISIN (Acc)	LU1670722161
ISIN (Dist)	LU1670722245
Initial charge	Max. 4,00%
AMC	1,00%
Ongoing charge**	1,22%

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Source of fund facts: M&G as at 31.07.22.

*The benchmark is a comparator against which the fund’s performance can be measured. 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.

**The ongoing charge is based on estimated expenses as at 01.01.22.

This is a marketing communication. Please refer to the prospectus and to the KIID before making any final investment decision.

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.

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

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

The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset’s value vary in an unexpected way, the fund will incur a loss. The fund’s use of derivatives may be extensive and exceed the value of its assets (leverage). This has the effect of magnifying the size of losses and gains, resulting in greater fluctuations in the value of the fund.

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.

The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.

The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.

Further details of the risks that apply to the fund can be found in the fund’s Key Investor Information Document and Prospectus.

The fund allows for the extensive use of derivatives.

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

For an explanation of the terms used in this document, please refer to the glossary on our website here