M&G (Lux) Optimal Income Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income based on exposure to optimal income streams in investment markets.

Investment policy and strategy

Core investment: The fund typically invests directly in a mix of assets within the following investment limits:

• at least 50% in fixed income securities (including bonds and asset-backed securities);

• up to 20% in company shares.

The fund invests in bonds issued by governments, government-related institutions and companies from anywhere in the world, including emerging markets. These bonds can be denominated in any currency. The fund may invest in bonds of any credit quality, including up to 100% in lower quality bonds. The fund may also invest in Chinese bonds denominated in renminbi.

A minimum of 80% of the fund is typically invested in assets denominated in euro or in other currencies hedged back to euro.

Other investments: The fund may invest in contingent convertible debt securities, other funds and cash or assets that can be turned into cash quickly.

Derivatives: The fund may invest via derivatives and use derivatives to reduce the risks and costs of managing the fund.

Strategy in brief: The fund is a flexible global bond fund. The investment manager selects investments based on an assessment of macroeconomic, asset, sector and stock-level factors. Spreading investments across issuers and industries 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.

In seeking an optimal income stream from investments, the investment manager may invest in a company’s shares if they present a more attractive investment opportunity relative to its bonds.

Benchmark: A composite index comprising:

• 1/3 Bloomberg Barclays Global Aggregate Corporate Index EUR Hedged

• 1/3 Bloomberg Barclays Global High Yield Index EUR Hedged

• 1/3 Bloomberg Barclays Global Treasury Index EUR Hedged

The benchmark is a comparator against which the fund’s performance can be measured. The composite 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.

For unhedged and currency hedged share classes, the benchmark is shown in the share class currency.

You can find more information about the objective and investment policy of the fund in the Prospectus.

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.

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.

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.

Other information

The Fund allows for the extensive use of derivatives.


The performance webpage for this fund is currently being reconfigured. In the interim, for performance information, please refer to the latest Fund Factsheet which can be found in the Literature section.

News

Fund Team

Richard Woolnough

Richard Woolnough - Fund manager

Richard Woolnough joined M&G in January 2004 and is fund manager of the M&G (Lux) Optimal Income Fund, as well as of the M&G Optimal Income Fund, the M&G Corporate Bond Fund and the M&G Strategic Corporate Bond Fund, three of the company’s flagship UK-authorised fixed interest OEIC funds. Richard began his career at Lloyds Merchant Bank in 1985, moving to Italian insurer Assicurazioni Generali two years later, followed by SG Warburg. In 1995, he became a fund manager at Old Mutual. Richard graduated from the London School of Economics with a BSc in economics.

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Stefan Isaacs

Stefan Isaacs - Deputy Manager

Stefan Isaacs is deputy head of M&G's Wholesale Fixed Income team and is fund manager of the M&G (Lux) European Corporate Bond Fund. He is also co-fund 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, and deputy fund manager of the M&G (Lux) Optimal Income Fund. Stefan initially 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, becoming part of the fund management team in 2006.

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Carlo Putti

Carlo Putti - Investment specialist

Carlo Putti is an associate investment specialist providing support for the M&G retail fixed interest fund range. He initially joined M&G in 2009, working on a part-time basis in the M&G Milan office, assisting the Italian Sales team. In 2013 Carlo moved to London, where he joined the M&G International Marketing team as a marketing executive before transferring to the M&G Retail Fixed Interest team nine months later. Carlo holds a degree in business economics from Cattolica University (Italy).

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Ratings

Rating is at a fund level

Silver Standard

Ratings as at 28/02/2020. 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.

This financial promotion is issued by M&G International Investments S.A.