229. Now there IS an alternative to equities

Richard Woolnough, veteran manager of three Elite Rated products, the M&G Corporate Bond, M&G Strategic Bond and the M&G Optimal Income fund, talks to us about some new acronyms in asset allocation. He tells us how equities can boost a bond fund’s returns, explains the wider impact of quantitative easing and quantitative tightening, and he finishes by commenting on whether he’s more bullish or bearish for 2023.
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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.

What’s covered in this episode:

  • Why it’s been an active year for the value investor
  • Why TINA has been replaced by TIAA
  • How interest rates have made bonds a more attractive investment
  • How equities can help to optimise returns in a bond fund
  • The impact of a 12-18mth lag from interest rate policy feeding into the real economy
  • The impact of quantitative tightening
  • What might happen to inflation in 2023
  • Whether the manager is bullish or bearish for the next 12 months
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.

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