M&G Income and Growth
Previously the M&G Episode Income
M&G Income and Growth is a multi-asset fund that aims to deliver a mix of income and long-term growth by investing directly in shares and bonds, as well as gaining exposure to property through specialist funds. The manager uses behavioural finance to spot areas of value in the market and take a more contrarian approach, investing where others may be overlooking opportunities.
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Our Opinion
This multi-asset fund has two strong differentiating attributes: it constantly looks for value created by investor irrationality and then takes positions that reflect those views. Investing directly into stocks and bonds gives greater liquidity within the fund, as well as keeping costs down. It is a strong consideration for investors looking for a core multi-asset portfolio.
Fund Managers
Stefano Amato, Co manager
Stefano Amato joined M&G in November 2022 with 15 years of experience in asset management and financial markets. Before M&G, he was Head of Multi Asset Solutions at Santander Asset Management. His previous roles include portfolio management positions at JP Morgan and Centurion Group, and various roles at Societe Generale, Nomura, and Lehman Brothers. Stefano holds an MSc in Finance from the London Business School, a Masters in Behavioural Economics, and a BA in Communication Sciences and Technologies from IULM University in Milan.
Maria Municchi, Co manager
Maria Municchi has been part of the multi-asset fund management team since January 2017, having initially joined M&G in 2009 as an investment specialist to the multi-asset and convertibles teams. Before M&G, Maria worked at Barings and UBS Asset Management. She has an MSc in international management and finance, is a CFA charterholder, and has successfully completed the University of Cambridge Institute of sustainability leadership programme in business sustainability management.
Risk
Risk management is an integral part of the process. Risk is primarily controlled through simple diversification. This diversification also allows the manager to produce a stable level of income. No position will account for more than 0.75% of the portfolio, which means individual holding risk is low. The fund manager is ultimately responsible for risk oversight, and is supported by independent risk and compliance teams within M&G. These teams monitor the fund on a daily basis against a range of risk measures and limits, helping to ensure that the portfolio remains consistent with its stated objectives and risk framework.
Company Description
Founded in 1931, M&G Investments employs more than 2,000 people worldwide, including 350 investment specialists. The company was formerly owned by Prudential plc, but de-merged in 2019 to become listed on the London Stock Exchange. It focuses primarily on fixed interest and equities, but also invests in multi-asset and real estate. Many of its fund managers have been with the company for more than 20 years. Managers are given freedom to implement their own style on funds.
Investment process
The fund is managed using a disciplined investment process designed to reduce the impact of emotional decision-making and behavioural bias in markets. At its core, the process focuses on identifying which income-generating assets appear attractively or unattractively priced and understanding the reasons behind those valuations.
The manager assesses what he considers to be a “fair” level of return for a wide range of global assets, based on long-term historical returns, economic theory and investor behaviour. This provides a reference point for valuation, which is then compared against current market pricing to highlight potential opportunities or areas of risk.
Where differences between fair value and market pricing are identified, the manager investigates the underlying drivers. In some cases, price movements may be justified by genuine changes in fundamentals. In others, they may be driven by behavioural factors such as overly narrow narratives, inconsistent market reactions to economic data, or sharp price moves that suggest emotional rather than rational decision-making.
Over time, the manager aims to take advantage of these behavioural inefficiencies, with the expectation that mispriced assets may correct as market sentiment normalises.
Risk
Risk management is an integral part of the process. Risk is primarily controlled through simple diversification. This diversification also allows the manager to produce a stable level of income. No position will account for more than 0.75% of the portfolio, which means individual holding risk is low. The fund manager is ultimately responsible for risk oversight, and is supported by independent risk and compliance teams within M&G. These teams monitor the fund on a daily basis against a range of risk measures and limits, helping to ensure that the portfolio remains consistent with its stated objectives and risk framework.
ESG
ESG - Integrated
M&G has clear and defined categories for the ESG focuses of its fund range. The M&G Income and Growth fund financially integrates material ESG data into its risk management and decision-making process. There are some basic company-wide exclusions which apply to the fund, such as cluster munitions and anti-personnel mines. ESG analysis is performed by a third party and imported into the process. The team will always engage with management to better understand a company and advise on diverse matters, including ESG issues, but will not necessarily exercise its shareholder right to vote.
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