Marketing communication. For Investment Professionals only

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

A defensive approach to high yield investing
James Tomlins, Fund Manager

“Against an uncertain economic backdrop, we believe high yield FRNs offer an appealing combination of features, providing an attractive income stream, while their defensive attributes should leave them well placed to withstand any future turbulence in high yield markets.”

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%

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


For Investment Professionals and Institutional Investors only. Not for onward distribution. No other persons should rely on any information contained within.

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, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by the initial recipient (provided it is a Qualified Investor) only.

In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G (Lux) Investment Funds 1 reg. no 1551.The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in Luxembourg.

In the Netherlands, all funds referred to are UCITS and registered with the Dutch regulator, the AFM. M&G Luxembourg S.A. is the manager of the UCITS referred to in this document. Registered Office: 16, boulevard Royal, L‑2449, Luxembourg.

The Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários, the “CMVM”) has received a passporting notification under Directive 2009/65/EC of the European Parliament and of the Council and the Commission Regulation (EU) 584/2010 enabling the fund to be distributed to the public in Portugal.

This information is not an offer or solicitation of an offer for the purchase of investment shares in one of the funds referred to herein. Purchases of a fund should be based on the current Prospectus. The Instrument of Incorporation, Prospectus, Key Investor Information Document, annual or interim Investment Report and Financial Statements, are available free of charge, in English or your local language (unless specified below) in paper form, from one of the following – M&G Luxembourg S.A., German branch, mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main; the Austrian paying agent: Société Générale Vienna Branch, Zweigniederlassung Wien Prinz Eugen-Strasse, 8-10/5/Top 11 A-1040 Wien, Austria; the Luxembourg paying agent: Société Générale Bank & Trust SA, Centre operational 28-32, place de la Gare L‑1616 Luxembourg; the Danish paying agent: Nordea Danmark, Filial af Nordea Bank Abp, Finland, Issuer Services, Postbox 850, Reg.no. 5528, DK-0900 Copenhagen C; Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, Spain; M&G Luxembourg S.A. French branch, 8 rue Lamennais, Paris 75008; the French centralising agent of the fund: RBC Investors Services Bank France; or the Swedish paying agent: Nordea Bank AB (publ), Smålandsgatan 17, 105 71 Stockholm, Sweden. For Switzerland, please refer to by M&G International Investments Switzerland AG, Talstrasse 66, 8001 Zurich or 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.

For Italy, they can also be obtained on the website: www.mandgitalia.it. For the Netherlands, they are available online at www.mandg.com/investments/nl and for more information concerning the Key Investor Information Document, please refer to www.afm.nl/ebi.  For Ireland, they are available in English language and can also be obtained from the Irish facilities agent, Société Générale SA, Dublin Branch, 3rd Floor IFSC House – The IFSC Dublin 1, Ireland. For Germany and Austria, copies of the Instrument of incorporation, annual or interim Investment Report, Financial Statements and Prospectus are available in English and the Prospectus and Key Investor Information Document/s are available in German. For Greece, they are available in English, except the Key Investor Information Document/s which is available in Greek, from the Greek Representative: Eurobank Ergasias S.A. 8, Othonos Street, 10557 Athens.

Before subscribing investors should read the Prospectus and Key Investor Information Document, which includes a description of the investment risks relating to these funds. The value of the assets managed by the funds may greatly fluctuate as a result of the investment policy. The information contained herein is not a substitute for independent investment advice.

M&G Luxembourg S.A. may terminate arrangements for marketing under the new Cross-Border Distribution Directive denotification process.

Complaints handling information is available in English or your local language from

Luxembourg: www.mandg.com/investments/professional-investor/en-lu/complaints-dealing-process

Ireland: www.mandg.com/investments/professional-investor/en-ie/complaints-dealing-process

Belgium: www.mandg.com/investments/professional-investor/en-be/complaints-dealing-process

Denmark: www.mandg.com/investments/professional-investor/en-dk/complaints-dealing-process

Norway: www.mandg.com/investments/professional-investor/en-no/complaints-dealing-process

Netherlands: www.mandg.com/investments/professional-investor/en-nl/complaints-dealing-process

Sweden: www.mandg.com/investments/professional-investor/en-se/complaints-dealing-process

Finland: www.mandg.com/investments/professional-investor/en-fi/complaints-dealing-process

Austria: www.mandg.com/investments/professional-investor/de-at/complaints-dealing-process

Germany: www.mandg.com/investments/professional-investor/de-de/complaints-dealing-process

Greece: www.mandg.com/investments/private-investor/en-gr/complaints-dealing-process

Spain:www.mandg.com/investments/professional-investor/es-es/complaints-dealing-process

Italy: www.mandg.com/investments/professional-investor/it-it/complaints-dealing-process

Portugal: www.mandg.com/investments/private-investor/pt-pt/complaints-dealing-process

France: www.mandg.com/investments/professional-investor/fr-fr/complaints-dealing-process

This financial promotion is issued by M&G Luxembourg S.A. Registered Office: 16, boulevard Royal, L‑2449, Luxembourg.