M&G (Lux) Global Convertibles Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global convertibles market over any five-year period.

Investment policy and strategy

Core investment: At least 70% of the fund is invested in convertibles issued by companies from anywhere around the world, including emerging markets*. The fund also holds company shares in combination with bonds in order to replicate the exposure to convertibles when a direct holding is not available. Company shares are also held to adjust the technical characteristics of individual convertibles, such as making them more sensitive to changes in the price of the shares into which they convert. The fund can also use derivatives rather than company shares for both purposes.

Other investment: The fund also holds cash or assets that can be turned quickly into cash.

Use of derivatives: The fund typically invests directly, but may also invest indirectly via derivatives. 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 investments.

For more information on the types of bonds held and derivatives used, please refer to the Prospectus

* 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 aims to take advantage of the special characteristics of convertibles, which can participate more in share price increases than falls. The investment manager selects investments based on an assessment of company-specific factors and technical characteristics of convertibles. 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.

Performance comparator: The fund is actively managed. The Thomson Reuters Global Focus Convertible Index is a point of reference against which the performance of the fund may be measured.

Glossary terms

Bonds: Loans to governments and companies that pay interest.

Convertibles: Bonds issued by companies that usually pay a set rate of interest and which can be exchanged for predetermined amounts of company shares.

Derivatives: Financial contracts whose value is derived from other assets.

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.

Convertibles are subject to the risks associated with both bonds and company shares, and to risks specific to the asset class. Their value may change significantly depending on economic and interest rate conditions, the creditworthiness of the issuer and the performance of the underlying company shares. In addition, issuers of convertibles may fail to meet payment obligations and their credit ratings may be downgraded. Convertibles may also be harder to sell than the underlying company shares.

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 can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.

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

Performance

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.

 

Fund Team

Leonard Vinville

Leonard Vinville - Fund manager

Léonard Vinville joined M&G in 2002, and since then has been managing the convertibles allocation of the Prudential With Profit Life Fund. He has also been responsible for managing the M&G Global Convertibles Fund since its launch in July 2007. Both funds are run with the same investment approach and with an emphasis on generating strong risk-adjusted returns. Prior to joining M&G, Léonard was Head of European Convertibles at AGF Asset Management in Paris, where he managed convertibles and French equity mandates. He has an MBA and is qualified as a chartered accountant.

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David Romani

David Romani - Deputy Manager

David Romani was appointed deputy manager of the M&G Global Convertibles Fund in October 2013. David joined M&G in 2005, performing a variety of roles in strategic planning, marketing and client communications before becoming a dedicated convertibles analyst in the Global Convertibles team. Prior to joining M&G, he worked for Prudential and as a consultant to the asset management and life insurance industries. David holds an MBA degree from the University of Chicago and is a CFA charterholder.

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Yannis Karachalios

Yannis Karachalios - Deputy Manager

Yannis Karachalios was appointed deputy manager of the M&G Global Convertibles Fund in October 2013, having joined M&G in 2011 as a credit analyst dedicated to the convertible bonds team. He is responsible for the credit analysis of convertible bonds and he has eight years of experience in high yield, leveraged loans and distressed debt. Yannis previously worked at Alpstar Capital in Geneva. Prior to this, he was a high yield credit analyst at Hermes Fund Managers London. Yannis has an MSc in financial economics from Brunel University.

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Susanne Grabinger

Susanne Grabinger - Investment specialist

Susanne Grabinger joined M&G in 2010 and is currently an investment specialist providing support for M&G's multi-asset fund range and the M&G Global Convertibles Fund. Prior to joining M&G, Susanne worked at JPMorgan Asset Management as a client portfolio manager, focusing on institutional equity accounts and balanced mutual funds. She holds a master’s degree in business administration from the University of Bamberg, Germany, and is a CFA charterholder. Susanne is fluent in German and English and is also proficient in French and Spanish.

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Ratings

Rating is at a share class level

3 Star Rating

Ratings as at 31/01/2019. The Morningstar Overall Rating. Copyright © 2019 Morningstar UK Limited. All Rights Reserved. The Morningstar Analyst Rating™. © 2019 Morningstar. All Rights Reserved. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Ratings should not be taken as recommendation.

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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.