M&G Strategic Corporate Bond
M&G Strategic Corporate Bond invests mainly in investment grade bonds, but up to 20% of the portfolio may also be held in high yield bonds, government debt, convertibles and preference stocks. It is the more flexible of two M&G corporate bond funds rated by FundCalibre.
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Richard Woolnough, Co-Manager Richard Woolnough joined M&G in January 2004 and manages three of its flagship fixed income strategies: Optimal Income, Corporate Bond, and Strategic Corporate Bond. His career began at Lloyds Merchant Bank in 1985, followed by roles at Assicurazioni Generali and SG Warburg. In 1995, he became a fund manager at Old Mutual. Richard graduated with a BSc in Economics from the London School of Economics.
Ben Lord, Co-Manager Ben Lord joined M&G in 2007 and became the manager of the M&G Global Corporate Bond strategy at its launch in September 2013. He also manages the M&G UK Inflation Linked Corporate Bond strategy and co-manages the Corporate Bond and Strategic Corporate Bond strategies. Before M&G, Ben worked as a credit analyst at Gordian Knot, focusing on global financial institutions. He holds an MA (Hons) from the University of Edinburgh and is a CFA charterholder.
Richard Woolnough, Co-Manager Richard Woolnough joined M&G in January 2004 and manages three of its flagship fixed income strategies: Optimal Income, Corporate Bond, and Strategic Corporate Bond. His career began at Lloyds Merchant Bank in 1985, followed by roles at Assicurazioni Generali and SG Warburg. In 1995, he became a fund manager at Old Mutual. Richard graduated with a BSc in Economics from the London School of Economics.
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Quote from the Fund Manager
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
Co-Manager
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. As a very large investor in the corporate bond world, M&G managers and analysts have no problems getting access to a company. Often this access will involve an on-site due-diligence visit to comprehend the workings of a company, its staff and other assets. They will generally not invest in a credit unless they have spoken to the issuing company beforehand. M&G Strategic Corporate Bond is more concentrated and more flexible than M&G Corporate Bond. Richard will also have greater conviction in varying the fund’s interest rate risk exposure.
Risk
Because the fund has a broader remit than many of its sector peers, the manager is able to take more aggressive positions. However, historically it has been no more risky than the average sterling bond fund. This is likely due to the fund taking less interest rate risk in recent years, although this may change in the future should Richard change his view. The fund is also extremely well diversified.
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. This particular fund uses ESG analysis to protect from potential downside risks. This work is carried out by the in-house credit analyst team, which identifies the risks and potential impact, and determines whether this diminishes the investment opportunity.
As the fund manager, Richard can choose whether he wishes to take these risks. As well as identifying risks, understanding ESG can also be a source of returns, whereby a firm with a product or service that is a solution to ESG issues may have improved fundamentals as it capitalises on this opportunity.
The team uses a proprietary, firm-wide system for scoring ESG. This not only helps with thought leadership, but also supports monitoring and engagement after investment. Debtholders typically have less direct influence than shareholders over a corporate’s strategy, but engaging helps better understand, manage, and potentially reduce ESG risks.
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