M&G (Lux) Emerging Markets Hard Currency Bond Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income that is higher than the hard currency emerging market bond market over any three-year period.

Investment policy and strategy

Core investment: At least 80% of the fund is invested, typically directly, in bonds issued by governments and government-related institutions in emerging markets. These bonds are denominated in the currencies of developed countries such as the US dollar, euro, yen and sterling.

Other investments: The fund may invest in bonds issued by emerging market companies or bonds issued in emerging market currencies, including Chinese bonds denominated in renminbi. The fund may also invest in other funds and cash or assets that can be turned into cash quickly.

Derivatives: The fund may invest via derivatives and use derivatives to reduce the risks and costs of managing the fund.

Strategy in brief: The fund employs has a flexible investment approach which begins with an analysis of the global economy. Within this framework, the investment manager’s approach involves forming a view on the economic outlook, identifying countries with solid fundamentals and evaluating the quality of individual bonds.

This disciplined, multi-pronged approach provides the basis for the fund’s asset allocation, country and currency weighting, as well as selection of bonds.

Benchmark: JPM EMBI Global Diversified Index

The benchmark is a comparator against which the fund’s performance can be measured. The index has been chosen as the fund’s benchmark as it best reflects the scope of the fund’s investment policy. The benchmark is used solely to measure the fund’s performance and does not constrain the fund's portfolio construction.

The fund is actively managed. The investment manager has complete freedom in choosing which investments to buy, hold and sell in the fund. The fund’s holdings may deviate significantly from the benchmark’s constituents.

For unhedged and currency hedged share classes, the benchmark is shown in the share class currency.

You can find more information about the objective and investment policy of the fund in the Prospectus.

Risks associated with the fund

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.

Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.

Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.

The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.

The fund may invest in China A shares. Investments in assets from the People's Republic of China are subject to changeable political, regulatory and economic conditions, which may cause difficulties when selling or collecting income from these investments. In addition, such investment is made via the 'Stock Connects' systems, which may be more susceptible to clearing, settlement and counterparty risk. These factors could cause the fund to incur a loss.

Investing in bonds from China, denominated in Renminbi and traded on the China Interbank Bond Market, may be subject to greater clearing, settlement and counterparty risk. These factors could cause the fund to incur a loss.

The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset's value vary in an unexpected way, the fund may lose as much as or more than the amount invested.

The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.

In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.

The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.

Operational risks arising from errors in transactions, valuation, accounting, and financial reporting, among other things, may also affect the value of your investments.

Further details of the risks that apply to the fund can be found in the fund's Prospectus.

Other information

The Fund allows for the extensive use of derivatives.


The performance webpage for this fund is currently being reconfigured. In the interim, for performance information, please refer to the latest Fund Factsheet which can be found in the Literature section.

Fund Team

Claudia Calich

Claudia Calich - Fund manager

Claudia Calich joined M&G in October 2013 as a specialist in emerging markets debt and, in December 2013, started managing the Emerging Markets Bond strategy. She became manager of the Global Government Bond strategy and deputy manager of the Global Macro Bond strategy in July 2015. Since May 2017, she has also been on the management team of strategies domiciled in Luxembourg. Claudia has more than 20 years of experience in emerging markets, including as a senior portfolio manager at Invesco in New York, and previous positions at Oppenheimer Funds, Fuji Bank, Standard & Poor’s and Reuters. Claudia graduated with a BA (Honours) in Economics from Susquehanna University in 1989 and holds an MA in International Economics from the International University of Japan in Niigata.

 Team member biography
Charles de Quinsona

Charles De Quinsonas - Deputy Manager

Charles de Quinsonas is an emerging market corporate bond specialist and has been working as co-fund manager and deputy fund manager for a series of emerging markets corporate bond funds domiciled in London and Luxembourg since 2015. He has more than a decade of emerging market corporate bond experience, with a deep knowledge of high yield credit. Prior to joining M&G in 2014, he worked at Spread Research in Lyon and New York, where he spent four years analysing a variety of high yield and emerging market industrial credits. Charles holds a B.B.A. from ESSEC Business School and a MSc in Corporate Finance from iaelyon School of Management.

 Team member biography

Ratings

Rating is at a share class level

3 Star Rating

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