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 most conventional bonds – which often suffer in a rising rate environment – FRNs pay a variable rate of income which is typically reset in line with interest rates, offering not only a way to help hedge against rising interest rates, but an opportunity to benefit from any future increase in interest rates.
- To help limit downside risks, the manager may focus 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, 2023. For illustrative purposes only. Assumes no change in credit spread. *Floating rate coupon automatically adjusted in line with changes in interest rates
For illustrative purposes only.
Reasons to invest
- Focusing on FRNs issued by high yield companies, this innovative fund aims to provide income while minimising the negative impact of rising interest rates.
- High yield FRNs also provide a relatively defensive approach to high yield investing and have historically 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 March 2023 | $1.913,90 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 |
| USD A share class | |
|---|---|
| ISIN (Acc) | LU1670723136 |
| ISIN (Dist) | LU1670723219 |
| Initial charge | Max. 4,00% |
| Ongoing charge** | 1,19% (Acc) 1,20% (Dist) |
Source of fund facts: M&G as at 31.03.23.
*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 expenses as at 31.12.22. The ongoing charge figures disclosed above include direct costs to the fund, such as the annual management charge (AMC), administration charge and custodian charge, but do not include portfolio transaction costs.
This is a marketing communication. Please refer to the prospectus and to the KID 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 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.
You can find Fund’s sustainability-related disclosures here.
For an explanation of the terms used in this document, please refer to the glossary on our website here.
For Investment Professionals only. Not for onward distribution. No other persons should rely on any information contained within. 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 Information Document, annual or interim Investment Report and Financial Statements, are available free of charge from M&G Luxembourg S.A., 16, boulevard Royal, L‑2449, Luxembourg. Before subscribing you should read the Prospectus, which includes investment risks relating to these funds. This financial promotion is published by M&G Luxembourg S.A. Registered Office: 16, boulevard Royal, L‑2449, Luxembourg.
United States: The Fund has not been registered under the United States Investment Company Act of 1940, as amended, nor the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any US Person) unless the securities are registered under the Act, or an exemption from the registration requirements of the Act is available. In the United States, this material may be distributed only to a person who is a “distributor,” or who is not a “U.S. person,” as defined by Regulation S under the U.S. Securities Act of 1933 (as amended).
Canada: M&G Funds are not registered for distribution in Canada. M&G cannot accept any subscriptions into its Funds from investors resident in Canada.
Chile: ESTA OFERTA PRIVADA SE INICIA EL DÍA 25/05/2023 Y SE ACOGE A LAS DISPOSICIONES DE LA NORMA DE CARÁCTER GENERAL Nº 336 DE LA SUPERINTENDENCIA DE VALORES Y SEGUROS (HOY, COMISIÓN PARA EL MERCADO FINANCIERO); ESTA OFERTA VERSA SOBRE VALORES NO INSCRITOS EN EL REGISTRO DE VALORES O EN EL REGISTRO DE VALORES EXTRANJEROS QUE LLEVA LA COMISIÓN PARA EL MERCADO FINANCIERO, POR LO QUE TALES VALORES NO ESTÁN SUJETOS A LA FISCALIZACIÓN DE ÉSTA; POR TRATAR DE VALORES NO INSCRITOS NO EXISTE LA OBLIGACIÓN POR PARTE DEL EMISOR DE ENTREGAR EN CHILE INFORMACIÓN PÚBLICA RESPECTO DE LOS VALORES SOBRE LOS QUE VERSA ESTA OFERTA; ESTOS VALORES NO PODRÁN SER OBJETO DE OFERTA PÚBLICA MIENTRAS NO SEAN INSCRITOS EN EL REGISTRO DE VALORES CORRESPONDIENTE.
Republic of Colombia: This document does not constitute a public offer in the Republic of Colombia. The offer of the fund is addressed to less than one hundred specifically identified investors. The fund may not be promoted or marketed in Colombia or to Colombian residents, unless such promotion and marketing is made in compliance with Decree 2555 of 2010 and other applicable rules and regulations related to the promotion of foreign funds in Colombia. The distribution of this document and the offering of shares may be restricted in certain jurisdictions. The information contained in this document is for general guidance only, and it is the responsibility of any person or persons in possession of this document and wishing to make application for shares to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Prospective applicants for shares should inform themselves of any applicable legal requirements, exchange control regulations and applicable taxes in the countries of their respective citizenship, residence or domicile.
Mexico: The M&G Funds have not been and will not be registered with the National Registry of Securities, maintained by the Mexican National Banking Commission and, as a result, may not be offered or sold publicly in Mexico. The M&G Fund and any underwriter or purchaser may offer and sell the funds in Mexico, to Institutional and Accredited Investors, on a private placement basis, pursuant to Article 8 of the Mexican Securities Market Law. Please note that each investor into a M&G Fund shall be responsible for calculating and paying its own taxes, receiving any necessary tax advice and that neither the funds nor M&G shall be deemed to have provided tax advice to a potential investor.
Uruguay: The shares must not be offered or sold to the public in Uruguay, except in circumstances which do not constitute a public offering or distribution under Uruguayan laws and regulations. The shares are not and will not be registered with the Financial Services Superintendency of the Central Bank of Uruguay. The shares correspond to investment funds that are not investment funds regulated by Uruguayan law 16,774 dated September 27th 1996, as amended.
Peru: The Shares in this fund have not been registered before the Superintendencia del Mercado de Valores (SMV) and are being placed by means of a private offer. SMV has not reviewed the information provided to the investor. This document is only for the exclusive use of institutional investors in Peru and is not for public distribution.
Brazil: The shares in the fund may not be offered or sold to the public in Brazil. Accordingly, the shares in the fund have not been nor will be registered with the Brazilian Securities Commission – CVM nor have they been submitted to the foregoing agency for approval. Documents relating to the shares in the fund, as well as the information contained therein, may not be supplied to the public in Brazil, as the offering of shares in the fund is not a public offering of securities in Brazil, nor used in connection with any offer for subscription or sale of securities to the public in Brazil.
Argentina: This document includes a private invitation to invest in securities. It is addressed only to you on an individual, exclusive, and confidential basis, and its unauthorised copying, disclosure, or transfer by any means whatsoever is absolutely and strictly forbidden. M&G Luxembourg S.A. will not provide copies of this document, or provide any kind of advice or clarification, or accept any offer or commitment to purchase the securities herein referred to from persons other than the intended recipient. The offer herein contained is not a public offering, and as such it is not and will not be registered with, or authorised by, the applicable enforcement authority. The information contained herein has been compiled by M&G Luxembourg S.A., who assume the sole responsibility for the accuracy of the data herein disclosed.