Marketing communication. For Investment Professionals only
M&G (Lux) Optimal Income Fund
A dynamic and flexible approach across the fixed income spectrum
Richard Woolnough, Fund Manager
“This is the most flexible bond strategy I manage. It allows me the freedom to search out the most attractive income streams across a range of fixed income assets in order to optimise performance throughout the economic cycle.”
Fund philosophy
The M&G (Lux) Optimal Income Fund takes its name from the manager’s aim to purchase those assets that provide the most attractive, or ‘optimal’, income stream for the fund. The fund’s unconstrained approach gives Richard Woolnough the possibility to move freely between government bonds, investment grade and high yield corporate bonds. He can also invest in equities when a company’s shares appear more attractive than its debt.
Richard actively manages the fund by combining a top-down macroeconomic approach with rigorous bottom-up credit analysis.
The fund manager’s preferences for duration and credit risk will depend on his outlook for interest rates, economic growth and inflation. The fund’s flexibility enables Richard to position the portfolio exactly in line with his duration and credit views.
Fund's key selling points
- A ‘core’ bond fund that seeks to outperform the major bond sectors in different market conditions.
- Classified as Article 8 fund under EU Sustainable Finance Disclosure Regulation (SFDR), the fund applies an ESG positive tilt and norms-based exclusions (see below).
- The fund promotes environmental/social characteristics and while it does not have as its objective a sustainable investment, it will have a minimum proportion of 20% of sustainable investments.
- Richard Woolnough has the flexibility to invest across the fixed income spectrum, and can even invest a portion of the fund (max. 20%) in equities.
- Richard has more than 30 years of experience in the fixed income market. Over that time his skill and expertise have been widely recognised.
Investment scope*
Portfolio positioning in practice
Duration positions shown in the chart above prior to September 2018 are those of M&G Optimal Income Fund, a UK-authorised OEIC, managed by the same fund manager, applying the same investment strategy as the SICAV. These are shown for illustrative purposes only.
*Norms-based Criteria
| ESG Criteria | Rationale |
|---|---|
| Freedom House | Any government bond from countries classified as "Not Free" by the Freedom House index based on civil liberties and political rights |
| UNGC | Any company that is assessed to be in breach of the United Nations Global Compact Principles on human rights, labour, environment protection and anti-corruption |
Source: M&G 2023
The fund’s Environmental, Social and Governance (ESG) positive tilt is achieved by maintaining a weighted average ESG score above the average ESG score of the benchmark.
Fund Facts
| 30 Nov 2022 | €9.947,85 million |
|---|---|
| Fund launch date | 05 September 2018 |
| Benchmark* | 1/3 Bloomberg Global Agg Corporate Index EUR Hedged; 1/3 Bloomberg Global High Yield Index EUR Hedged; 1/3 Bloomberg Global Treasury Index EUR Hedged |
| Sector | Morningstar EUR Cautious Allocation – Global sector |
| EUR A share class | |
|---|---|
| ISIN (Acc) | LU1670724373 |
| ISIN (Dist) | LU1670724456 |
| Initial charge | Max. 4,00% |
| AMC | 1,25% |
| Ongoing charge** | 1,33% |
| SFDR classification | Article 8 |
Source of fund facts: M&G as at 30.11.22.
*The benchmark is a comparator used solely to measure the fund’s performance and reflects the scope of the fund’s investment policy but does not constrain portfolio construction. The fund is actively managed. The fund’s holdings may deviate significantly from the benchmark’s constituents. The benchmark is not an ESG benchmark and is not consistent with the ESG Criteria.
**The ongoing charge is based on expenses as at 31.03.22.
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. There is no guarantee that the fund will achieve its objective 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 is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.
ESG information from third-party data providers may be incomplete, inaccurate or unavailable. There is a risk that the investment manager may incorrectly assess a security or issuer, resulting in the incorrect inclusion or exclusion of a security in the portfolio of the fund.
Further details of the risks that apply to the fund can be found in the fund's 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.
The views expressed in this document should not be taken as a recommendation, advice or forecast.
The fund’s sustainability-related disclosures can be found here
For an explanation of the terms used in this document, please refer to the glossary on our website here
Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to Qualified Investors according to the Swiss Collective Investment Schemes Act ("Qualified Investors"). Supplied for the use by the initial recipient (provided it is a Qualified Investor) only.
The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in Luxembourg. The Instrument of Incorporation, Prospectus, Key Investor Information Document, as well as the annual or interim Investment Report and Financial Statements can be obtained free of charge in English from M&G International Investments Switzerland AG, Talstrasse 66, 8001 Zurich or from Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, 8021 Zurich, which acts as the Swiss representative of the Schemes (the "Swiss Representative") and acts as their Swiss paying agent.
Before subscribing investors should read the Prospectus and Key Investor Information Document, which includes a description of the investment risks relating to these funds.
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Complaints handling information is available in English from https://www.mandg.com/investments/professional-investor/en-ch/contact-us
This financial promotion is issued by M&G Luxembourg S.A. Registered Office: 16, boulevard Royal, L-2449, Luxembourg.