M&G (Lux) Floating Rate High Yield Solution

Objective and investment policy

Objective

The fund aims to provide a competitive global high yield bond market exposure whilst limiting interest rate risk. Fund performance is measured against a global high yield composite index (the performance comparator) over any five-year period.

Investment policy and strategy

Core investment: At least 70% of the fund is invested in floating rate high yield bonds. The exposure to floating rate high yield bonds is typically gained indirectly via derivatives (high yield credit default swaps) combined with government floating rate bonds from anywhere in the world, or cash.

Between 70% and 130% of the fund is exposed to the high yield bond market, by investing directly or indirectly via derivatives. The fund’s neutral geographical asset allocation is 2/3 North America and 1/3 Europe.

The fund typically invests in assets denominated in US dollar or in other currencies hedged back to the US dollar.

Other investment: The fund may invest in other debt securities (including government bonds) and currencies. The fund may also invest in other funds, cash or assets that can be turned quickly into cash.

Derivatives: The fund invests via derivatives and may use derivatives with the aim of reducing the risks and costs of managing the fund.

Strategy in brief: The fund is globally diversified and seeks to provide exposure to a broad range of high yield bond issuers across different sectors. The investment manager has the flexibility to adjust the fund’s credit exposure and regional allocation depending on current market valuations and the macroeconomic environment, including the likely path of economic growth, inflation and interest rates.

Performance comparator: The fund is actively managed. A composite index made up of the following indices is a point of reference against which the performance of the fund may be measured:

- 2/3 Markit CDX North American High Yield 5Y Excess Return Index

- 1/3 Markit iTraxx Europe Crossover 5Y Excess Return Index and Overnight LIBOR

Risks associated with 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.

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.

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 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.

In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.

The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.

Further details of the risks that apply to the fund can be found in the fund's Prospectus.

Other information

The Fund allows for the extensive use of derivatives.

Fund Team

James Tomlins

James Tomlins - Fund manager

James Tomlins is fund manager of the M&G (Lux) Global Floating Rate High Yield Fund and co-manager of the M&G (Lux) Global High Yield Bond Fund, M&G (Lux) Floating Rate High Yield Solution, M&G (Lux) Global High Yield ESG Bond Fund and M&G (Lux) Global High Yield Bond 2023 Fund since launch. James is a specialist in high yield credit with more than 10 years’ experience in this sector. He was previously an analyst and then a fund manager at Cazenove Capital Management. Before Cazenove, James was at KBC Alternative Investment Management; in the three years prior to that, he worked at Merrill Lynch Investment Managers. James is a CFA charterholder and graduated with an MA in history and PgDip in economics from the University of Cambridge.

 View profile
Stefan Isaacs

Stefan Isaacs - Fund manager

Stefan Isaacs is Deputy Head of Retail Fixed Interest for M&G's mutual fund range. He joined M&G as a graduate in 2001 and was subsequently promoted to corporate bond dealer specialising in high yield bonds and euro-denominated credit. Stefan joined the fund management team in 2006 and was appointed fund manager of the M&G European Corporate Bond Fund in April 2007 and the M&G Global High Yield Bond Fund in October 2010. He is co-fund manager of the M&G (Lux) Floating Rate High Yield Solution, launched in August 2017 and the M&G (Lux) Global High Yield ESG Bond Fund, launched in October 2017. Stefan is also deputy fund manager of the M&G Optimal Income Fund, the M&G European High Yield Fund and the M&G Global Floating Rate High Yield Fund.

 View profile

Need further information?


The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in England and Wales. Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, 8021 Zurich acts as the Swiss representative of the Schemes (the "Swiss Representative") andacts as their Swiss paying agent. The Instrument of Incorporation, Prospectus, the Key Investor Information Document, as well as the annual or interim Investment Report and Financial Statements of the Schemes (each in their respective latest version approved by the Swiss Financial Market Supervisory Authority, in German) can be obtained free of charge from the Swiss Representative in Zurich.


The value of 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.