M&G Corporate Bond Fund

The industry’s first mainstream corporate bond fund,
designed to deliver consistent, long-term performance

With interest rates at historic lows, corporate bonds could be a good alternative to cash: they offer the potential for both greater income than from cash deposits, and a smoother return path than equities. So, if, when compared with cash, you are comfortable with the higher risk of fixed interest, the M&G Corporate Bond Fund could be an ideal addition to your portfolio.

The fund, managed by Richard Woolnough, invests mainly in investment grade (higher-rated) corporate bonds. These are usually issued by established companies that are considered less likely to default on their debt payment obligations, therefore providing investors with a more reliable source of income.

Richard applies his views on the likely direction of economic growth, inflation and interest rates in managing the fund and ultimately on which sectors to invest in. He combines this with detailed analysis of the companies themselves.

Avoiding the losers

Assessing the risk of corporate default is an integral part of the investment process, as Richard believes that superior performance is achieved by ‘avoiding the losers’ rather than ‘picking the winners’. Working in partnership with M&G’s team of dedicated public credit analysts provides Richard with in-depth analysis of the creditworthiness of individual companies. It also enables him to hold independent views on bond issuers rather than having to rely solely on credit ratings agencies as he seeks attractive investment opportunities.

Reasons to invest

• The M&G Corporate Bond Fund is designed to provide a regular income and the potential for capital growth with a lower risk than equity investment.
• The fund invests in bonds issued by established companies, but may hold some government bonds where deemed appropriate.
• The fund’s manager, Richard Woolnough, joined M&G in January 2004 and has over 20 years experience of managing corporate bond funds.
• The fund is ranked in the top 10% of the IMA £ Corporate Bond Sector over the past year, and over three, five and ten years.
• Richard can draw on the experience of one of the City’s foremost teams of fixed interest professionals (including fund managers and credit analysts). 
• M&G’s fixed income expertise was acknowledged when we were named 'Best Fixed Interest Group' for the fourth year running at the Professional Adviser Awards 2011.

How has the M&G Corporate Bond fund performed?

• The M&G Corporate Bond Fund has achieved a return of 36.0% over five years, outperforming its comparative sector, the IMA £ Corporate Bond Sector, by 19.8%.
• Over 10 years the fund returned 68.2%, outperforming its sector by 19.0%.
• Since Richard Woolnough began managing the M&G Corporate Bond Fund in February 2004, he has achieved a return of 55.4%, outperforming the sector by 20.4%.

Please remember that you should not base decisions on past performance, prices may fluctuate and you may not get back your original investment. Up to £85,000* of your money is secure in a bank or building society unlike a stocks or shares or fixed interest investment. This fund provides a variable level of income. The value of your investment will fall if the issuer of a bond held within the fund defaults or is perceived as an increased credit risk. Interest rate fluctuations may affect the capital value of fixed interest securities held by a fund. Capital value is likely to fall when interest rates rise and vice versa.

Source of all performance figures: Morningstar Inc., and M&G Statistics, bid to bid, net income reinvested, Sterling Class A Shares as at 31 October 2011.

All ratings as at 31 October 2011. Ratings should not be taken as a recommendation.

*The Financial Services Compensation Scheme as at 31.12.10