Objective and investment policy
The fund aims to provide a competitive global high yield bond market exposure whilst limiting interest rate risk. Fund performance will be measured against a global high yield composite index* over any five-year period. The fund is actively managed and the index is a point of reference against which the performance of the fund may be measured.
Investment policy and strategy
*The composite index consists of 2/3 the Markit CDX® North American High Yield Index and 1/3 the iTraxx Crossover Index.
Core investment: At least 70% of the fund is invested synthetically in floating rate high yield bonds. This exposure is achieved by combining high yield credit default swap (CDS) indices with government floating rate bonds (rated A or above by Standard & Poor’s), from anywhere in the world, or cash. A high yield CDS index is a derivative instrument that gives investors indirect exposure to a basket of high yield bonds which are easily traded and have low interest rate risk. Currency exposures within the fund will be typically in US dollars. Derivatives may be used to offset the impact of currency exposures arising from the fund’s non-USD investments.
Other investment: The fund may also invest in other assets, including government bonds, currencies, cash or assets that can be turned quickly into cash, other debt securities, warrants and other funds.
Use of derivatives: Derivatives are used for investment purposes and to allow the fund to gain exposure to investments exceeding the fund’s value, thus increasing potential returns (or losses).
Derivatives may also be used to manage risks and reduce costs. For more information on the types derivatives used, please refer to the Prospectus, which can be found by visiting www.mandg.lu.
Strategy in brief: The fund is globally diversified and seeks to provide exposure to a broad range of high yield bond issuers across different sectors. The investment manager has the flexibility to adjust the fund’s credit exposure and regional allocation depending on current market valuations and the macroeconomic environment, including the likely path of economic growth, inflation and interest rates.
Bonds: Loans to governments and companies that pay interest. Derivatives: Financial contracts whose value is derived from other assets. Floating rate bonds: A type of bond whose interest payments, or coupons, are adjusted in line with movements in interest rates. High yield bonds: Bonds issued by companies considered to be riskier and therefore generally paying a higher level of interest. Warrants: Financial contracts which allow the fund manager to buy stocks for a fixed price until a certain date.
Risks associated with the fund
The value of investments and the income from them will rise and fall. This will cause
the fund price, as well as any income paid by the fund, to fall as well as rise. There
is no guarantee the fund will achieve its objective, and you may not get back the
amount you originally invested.
If the share class is hedged (H share class), it aims to mirror the performance of another share class. We cannot guarantee that the hedging objective will be achieved. The hedging strategy will limit holders of the hedged share class from benefiting if the hedged share class currency falls against the US dollar.
The fund may use derivatives to gain exposure to investments exceeding the value
of the fund (leverage). This may cause greater changes in the fund’s price and
increase the risk of loss.
The value of the fund will fall if the issuer of a fixed income security held is unable
to pay income payments or repay its debt (known as a default). Fixed income
securities that pay a higher level of income usually have a lower credit rating
because of the increased risk of default. The higher the rating the less likely it is
that the issuer will default, but ratings are subject to change.
Some transactions the fund makes, such as placing cash on deposit, require the
use of other financial institutions (for example, banks). If one of these institutions
defaults on their obligations or becomes insolvent, the fund may incur a loss.
The Fund allows for the extensive use of derivatives.