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M&G 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 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.
  • 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.

Fund Facts

31 March 2022 £1727.65 million
Fund launch date 08 December 2006
Benchmark* IA Sterling Strategic Bond sector
Sector IA Sterling Strategic Bond sector

Source of fund facts: M&G as at 31.03.22.

*The benchmark is a target which the fund seeks to outperform. The sector has been chosen as the benchmark as the fund is a constituent of the sector. The benchmark is used solely to measure the fund’s performance and does not constrain portfolio construction. The fund is actively managed. The fund manager has complete freedom in choosing which investments to buy, hold and sell in the 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.

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.

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.