The M&G (Lux) Global Floating Rate High Yield Fund is designed for investors seeking an attractive level of income but who are concerned about the negative impact of rising interest rates.
Unlike conventional bonds, which normally suffer in a rising rate environment as their fixed income streams become relatively less attractive, FRNs pay a variable level of income which is regularly adjusted in line with interest rates.
High yield FRNs may also appeal to investors looking for a more defensive approach to high yield, with these assets typically exhibiting lower volatility compared to conventional high yield bonds.
The M&G (Lux) Global Floating Rate High Yield Fund, a Luxembourg-authorised SICAV, launched on 21 September 2018. On 7 December 2018, the non-sterling share classes of the M&G Global Floating Rate High Yield Fund (a UK-authorised OEIC) merged into the SICAV. The SICAV is run by the same fund manager, applying the same investment strategy, as the UK-authorised OEIC.
Generating income without undue interest rate risk
How high yield floating rate notes work
Illustrative example: Providing an attractive income stream as interest rates rise
Delivering a growing income stream in a yield-starved environment
Source: M&G, 2015. *Floating rate coupon automatically adjusted in line with changes in interest rates