120. Why inflation could be stronger than people expect

Richard Woolnough has managed M&G Optimal Income fund since its launch 15 years ago. In this episode he looks back over 2020, looks forward to 2021, and tells us what the combination of central banks and governments focusing on growth, pent-up consumer demand and weaker companies having already failed, means for fixed income this year. Richard also gives his view on inflation, which he says has a stronger impetus today than a decade ago.
Apple Podcast Spotify Podcast

M&G is perhaps the biggest name in the UK bond space, and M&G Optimal Income is its flagship offering. This ‘go-anywhere’ fund has a flexible mandate, which enables the manager to shift the interest rate exposure and to invest across the fixed income spectrum. The fund can, and often does, invest in some equities, and also derivatives.

Read more about M&G Optimal Income

What’s covered in this podcast:

  • How the flexibility of the fund over the past 15 years has helped navigate volatile markets [0:50]
  • Which opportunities the manager made the most of 2020 [3:18]
  • Whether the fund also took the opportunity to invest in equities during the market sell-off – including why Microsoft’s bonds fell more than its equity [5:52]
  • Are bonds expensive today? [9:29]
  • How the environment for bonds in 2021 differs to 2020 [10:54]
  • Why inflation impetus is stronger today than a decade ago [13:50]
  • Why the manager likes Kraft-Heinz – a company whose shareholder register includes legendary investor Warren Buffett [16:31]
This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.

More Episodes