Objective and investment policy
The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global investment grade corporate bond market over any five-year period.
Investment policy and strategy
Core investment: At least 80% of the fund is invested in investment grade bonds issued by companies from anywhere in the world, including emerging markets*, and denominated in any currency.
Other investment: The fund also invests in bonds issued by governments, corporate high yield bonds, cash and assets that can be turned quickly into cash.
Use of derivatives: Derivatives may be used to invest indirectly in bonds. Derivatives may also be used to manage risks and reduce costs, as well as to offset the impact of currency exposures arising from the fund’s non-US dollar investments.
For more information on the types of bonds held and derivatives used, please refer to the Prospectus, which can be found by visiting [**VARIABLE**]
* Emerging market countries are defined as those included within the MSCI Emerging Markets Index and/or those included in the World Bank’s definition of developing economies, as updated from time to time.
Strategy in brief: The investment manager selects investments based on an assessment of macroeconomic factors such as economic growth, interest rates and inflation.
Spreading investments across issuers, industries and countries is an essential element of the fund’s strategy and the investment manager is assisted in the selection of individual bonds by an in-house team of analysts. The investment manager seeks to invest in bonds believed to offer the best relative value opportunities in the investment grade corporate bond universe.
Performance comparator: The fund is actively managed. The Barclays Global Aggregate Corporate Index (USD Hedged) Index is a point of reference against which the performance of the fund may be measured.
Bonds: Loans to governments and companies that pay interest.
Derivatives: Financial contracts whose value is derived from other assets.
High yield bonds: Bonds issued by companies considered to be riskier and therefore generally paying a higher level of interest.
Investment grade corporate bonds: Bonds issued by a company with a medium or high credit rating from a recognised credit rating agency. They are considered to be at lower risk from default than those issued by companies with lower credit ratings.
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.
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.
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 may lose as much as or more than the amount invested.
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.
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.
The Fund allows for the extensive use of derivatives
The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. The level of any income earned by the fund will fluctuate. Past performance is not a guide to future performance. The performance data does not take account of the commissions and costs incurred on the issue and redemption of units.
Source: Price: State Street. Performance: Morningstar. For non-Sterling share classes for fixed income and global convertibles funds, performance figures are shown on a price to price with gross income reinvested basis*. For equities and multi-asset funds, performance figures are shown on a price to price with net income reinvested basis. For Sterling share classes performance figures are on a price to price with net income reinvested basis. Performance figures may not reflect all relevant charges.
Please note that the Morningstar Category performance data in this tool where shown, is from the default Morningstar database, which contains all the share classes for each fund available across Europe, Asia and Africa. This can differ from the comparative sector data in M&G factsheets which is from the same database, but showing only the most appropriate share class to represent each fund, and for just those funds available in Europe. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information.
*M&G Optimal Income Fund Sterling share classes are gross income reinvested.