The macroeconomic environment is changing. After years of ultra-low interest rates, investors now have an opportunity to view bonds in a more constructive light, especially government bonds. We believe bonds may now offer investors a potentially appealing and expanded investment opportunity set. This is especially true given that central banks are at the end of their rate-hiking cycle, with cuts in interest rates forecast for the future.
Against this macro backdrop, investors may find attractive and diversified risk-adjusted returns across a range of government and corporate bonds, investment grade and high yield bonds, and from developed countries to emerging markets.
The value of investments will fluctuate, which will cause prices to fall as well as rise. There is no guarantee the fund will achieve its objective, and you may not get back the original amount you invested. Where performance is mentioned, past performance is not a guide to future performance.
A global, flexible bond fund that aims to provide an attractive income. With a proven track record of over 17 years that can invest in the three main fixed income asset classes: government bonds, investment grade and high yield. The M&G (Lux) Optimal Income Fund has the ability to invest up to 20% in equities. 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. The fund’s recommended holding period is 5 years. In normal market conditions, the fund’s expected average leverage – how much it can increase its investment position by borrowing money or using derivatives – is 200% of its net asset value. The fund is actively managed and its benchmarks are 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.
Dynamic allocation across government, investment grade and high yield bonds.
Seeks optimal mix of duration and credit allocation in any environment.
Actively managed, combining macroeconomic views and bottom-up security selection.
Managed by experienced investment professionals.
At least 50% of the portfolio is invested in a broad range of fixed income securities of any credit quality and country, including emerging markets, and denominated in any currency. At least 80% of the portfolio will be invested in assets denominated in euro or in other currencies hedged back to euro.
The fund benefits from portfolio managers with an average of 24 years’ experience, along with one of the largest credit analyst teams in Europe. These combined allow us to enhance our flexibility by capturing an increasing number of opportunities that have been arising globally.
Source: M&G Investments, 31 December 2023. *This strategy originally launched on 8 December 2006 as a UK-authorised OEIC, named M&G Optimal Income Fund, run by the same fund managers, applying the same investment strategy.
"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."
Richard Woolnough
Fund Manager
The M&G (Lux) Optimal Income Fund takes its name from the manager’s aim to invest in 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.
Further details of the risks that apply to the fund can be found in the fund's Prospectus.
Investing involves risks, including the loss of capital.