M&G Optimal Income Fund - A review of 2018 and outlook for 2019

Fund updates

Richard Woolnough

06/02/2019

Volatility proved to be the predominant theme in 2018, and many financial assets lost ground. In these circumstances, the fund fell, with its long credit spread duration the main factor in the decline. Its peripheral eurozone government bond exposure and tilt towards US credit helped, in relative terms. Wall Street and Main Street have diverging narratives about the state of the economy. We believe the latter is correct, and that the real economy remains healthy. Credit valuations look attractive after the significant sell-off in risk assets in the latter stages of 2018.