The M&G Optimal Income Fund

Apologies for the low number of posts this week – we’ve been preparing for Friday’s (8th December) launch of the new M&G Optimal Income Fund, run by Richard Woolnough. This is our first “specialist” bond fund to utilise UCITS III wider powers, and allows the fund manager to have a lot of flexibility in managing exposures to different bond asset classes (i.e. high yield, governments, investment grade) as well as being able to use derivatives to manage both duration and credit risk. For the first time we will be able to express a negative view on a company’s bonds as well as a positive one – which given that bond fund management is a lot about identifying the downside risks to companies is a good development. Richard’s initial portfolio also contains about 10% in equities where we think that the potential returns from the shares look more attractive than those of the bonds – this might be the case if the equity yield is higher than the bond yield, or if we consider the company to be a target for an LBO through a private equity bid. This is likely to be a riskier bond fund than normal, so click through to see health warnings etc.

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

Jim Leaviss

Job Title: CIO Public Fixed Income

Specialist Subjects: Macro economics and fixed interest asset allocation

Likes: Cycling, factory records, dim sum

Heroes: Brian Clough, Morrissey, Neil Armstrong

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