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M&G Strategic Corporate Bond

Elite Rated by FundCalibre

The fund aims to maximise total return (the combination of income and growth of capital). It invests mainly in investment grade bonds, but up to 20% may also be held in high yield bonds, government debt, convertibles and preference stocks.

Company Description

Founded in 1919, M&G Investments employs more than 1,500 people worldwide. The company, owned by Prudential plc, which is listed on the London Stock Exchange, focuses primarily on fixed interest and equities, but also invests in multi-asset and real estate. Its fund managers have an average tenure of 11 years, although many have been with the company for more than 20 years. Managers are given freedom to implement their own style on funds.

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Fund Manager

Richard Woolnough joined M&G in 2004 and is also manager of M&G Optimal Income and M&G Corporate Bond. Richard is a member of one of the strongest fixed interest teams in the UK, led by Jim Leaviss.

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In this fund, I have more freedom to back my convictions. I take a focused approach with larger positions in an effort to enhance returns for investors.

Richard Woolnough - Fund Manager

The Investment Process

Richard’s view on the economic outlook will determine the asset classes and sectors in which the portfolio is concentrated. M&G’s in-house credit team then provide in-depth analysis of the corporate bond markets, which complements the fund manager’s views. The fund is managed more aggressively than M&G Corporate Bond, with the manager deviating further from the benchmark in terms of asset allocation and interest rate exposure.

Risk

Because the fund has a broader remit than many of its sector peers, the manager is able to take more aggressive positions. This can make it riskier than many others in its sector, but also enhances the opportunities Richard can access.

Our Opinion

This fund has long been a core holding in the corporate bond sector, run as it is by one of the most experienced bond teams in the UK. Its size is becoming an issue as investment opportunities become harder to find, but the resources available at M&G go a long way to alleviating this issue, as does the 20% permitted to other fixed interest assets.

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