M&G Global Macro Bond
M&G Global Macro Bond is a 'go-anywhere' bond fund: manager Jim Leaviss can invest in any bond issued by governments and companies absolutely anywhere in the world. He can also invest in any currency. In deciding where to invest, Jim will use his considerable skill to take a view on macroeconomic conditions and combine this view with the stock-picking skill of his team to create a portfolio that should benefit from both long-term trends and short-term tactical investments.
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Jim Leaviss was appointed CIO of M&G Public Fixed Income in February 2020, leading a team that invests in investment grade and high yield credit, government debt, and emerging markets debt. He joined M&G in 1997 after five years at the Bank of England as a gilt market analyst and dealer. In addition to his CIO role, Jim manages and co-manages a variety of fixed income funds based in London and Luxembourg.
Eva Sun-Wai became the lead manager of the Global Government Bond strategy and deputy manager of the Global Macro Bond strategy in January 2021. Prior to this, she was a junior macro fund manager in the Wholesale Fixed Income team, focusing on macroeconomic trade ideas for the Global Macro Bond and Absolute Return Bond strategies. Eva joined M&G in 2018 through the Investment Graduate Scheme, gaining experience in emerging market debt, corporate credit research, real estate, and long-term investment strategy. Before M&G, she interned at State Street Global Advisors on passive products and ETF strategies. She holds a BSc (Hons) in Economics from the University of Birmingham, the IMC and Financial Services Level 6 qualifications, and is a Level 2 CFA candidate.
Jim Leaviss was appointed CIO of M&G Public Fixed Income in February 2020, leading a team that invests in investment grade and high yield credit, government debt, and emerging markets debt. He joined M&G in 1997 after five years at the Bank of England as a gilt market analyst and dealer. In addition to his CIO role, Jim manages and co-manages a variety of fixed income funds based in London and Luxembourg.
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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 the freedom to implement their own style on funds.
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Investment process
As the Global Macro Bond fund’s title suggests, the process starts with a look at the global macroeconomic picture to identify the things that are going to affect bond markets over the next few years. Jim will consider factors such as central bank regimes and the long-term inflation target. He will also look at the current point in the global economic cycle, and try to identify any source of thematic disruption, such as the impact of new technology on inflation, or the increasing rise in populist politics and what impact that too could have.
With this broad level of understanding, Jim will move on to choosing the bond markets he likes the most and create an overarching asset allocation. Not only does this identify the bond markets he prefers, but also which instrument is best to implement that choice. Jim will then look across M&G’s global bond team, picking the best ideas that fit with his longer-term macro views and shorter-term overlays. The goal is to find a range of bonds that are not correlated with each other.
Risk
Risk is a key input into the whole framework, with correlation the main consideration. Jim will use derivatives to help with reducing risk and will ‘neutralise’ positions to ensure that when he makes an investment, he takes specific risks, not unintentional ones. Investing in currencies add to risk. The fund is totally unconstrained on its broad asset allocation, but has some restrictions by issuer. Investment grade issuers are limited to 5%, with high yield issuers to 3%. Investment grade governments bonds have no restrictions.
ESG
ESG - Integrated
M&G has clear and defined categories for the ESG focus of its fund range. The explicit ESG range includes impact, sustainable and plus features. Other funds have different levels of integration, with a focus on investment stewardship. There are also some company-wide exclusions for all funds, such as cluster munitions. With this fund, the internal credit team incorporates ESG analysis into its fundamental analysis work. The primary aim of this is to identify potential downside risks, though it may also identify opportunities from those firms on the right side of emerging ESG trends.
Jim looks at a variety of trades, both near term and over a longer period. As such, he may invest in the debt of companies with longer-term ESG issues, but which may have a short-term return opportunity. He will still want to understand all ESG risks for a holding, and the impact it could have on the business, though this may be deemed immaterial in the short-term. There is also engagement after investment, supported by the wider ESG team that will engage with company management to better understand, manage, and potentially reduce ESG risks.
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