M&G (Lux) Global Floating Rate High Yield Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global floating rate high yield bond market over any five-year period.

Investment policy and strategy

Core investment: At least 70% of the fund is invested in high yield floating rate notes (FRNs) issued by companies or governments from anywhere in the world and denominated in any currency. The FRNs are held directly and indirectly via derivatives combined with physical bonds. The fund also invests in asset-backed securities. The fund aims to hedge any non-US dollar assets back to US dollar.

Other investments: The fund may invest in cash or assets that can be turned quickly into cash.

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

Strategy in brief: The fund is designed to provide income while minimising the negative impact of rising interest rates by investing mainly in FRNs. The fund focuses on bonds issued by companies with below investment grade credit ratings, which typically pay higher levels of interest to compensate investors for the greater risk of default. The investment process of the fund is based on the bottom-up analysis of individual bond issues whilst remaining aware of macroeconomics developments.

Spreading investments across issuers, industries and countries is an essential element of the fund’s strategy and the investment manager is assisted in the selection of individual bonds by an in-house team of credit analysts.

Benchmark: BofA Merrill Lynch Global Floating Rate High Yield Index (3% constrained) USD Hedged 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.

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.

High yield bonds usually carry greater risk that the bond issuers may not be able to pay interest or return the capital.

The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.

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.

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.

News

  • M&G Investments // 20/12/2019

    We are making changes to this fund on 12 February 2020. The changes are detailed in our letter to Shareholders.

      Read the full article

Fund Team

James Tomlins

James Tomlins - Fund manager

James Tomlins is fund manager of the M&G (Lux) Global Floating Rate High Yield Fund and co-manager of the M&G (Lux) Global High Yield Bond Fund, M&G (Lux) Floating Rate High Yield Solution, M&G (Lux) Global High Yield ESG Bond Fund and M&G (Lux) Global High Yield Bond 2023 Fund since launch. James is a specialist in high yield credit with more than 10 years’ experience in this sector. He was previously an analyst and then a fund manager at Cazenove Capital Management. Before Cazenove, James was at KBC Alternative Investment Management; in the three years prior to that, he worked at Merrill Lynch Investment Managers. James is a CFA charterholder and graduated with an MA in history and PgDip in economics from the University of Cambridge.

 Team member biography
Stefan Isaacs

Stefan Isaacs - Deputy Manager

Stefan Isaacs is deputy head of M&G's Wholesale Fixed Income team and is fund manager of the M&G (Lux) European Corporate Bond Fund. He is also co-fund manager of the M&G (Lux) Global High Yield Bond Fund, M&G (Lux) Floating Rate High Yield Solution, M&G (Lux) Global High Yield ESG Bond Fund and M&G (Lux) Global High Yield Bond 2023 Fund, and deputy fund manager of the M&G (Lux) Optimal Income Fund. Stefan initially joined M&G as a graduate in 2001 and was subsequently promoted to corporate bond dealer specialising in high yield bonds and euro-denominated credit, becoming part of the fund management team in 2006.

 Team member biography
Ana Gil

Ana Gil - Investment specialist

Ana Gil joined M&G in 2012 as an associate investment specialist covering M&G’s fixed interest fund range. Prior to working at M&G, Ana was initially an analyst at HSBC Private Bank, and then joined HSBC Global Asset Management as part of the institutional sales team. She holds a bachelor's degree in law and finance from Pontificia Comillas University (ICADE) in Madrid and is a CFA charterholder. Ana is fluent in Spanish, English and Italian.

 Team member biography

Ratings

Rating is at a share class level

1 Star Rating

Rating is at a fund level

Bronze Standard

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