M&G Corporate Bond Fund

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 path than equities. So, if you are comfortable with the higher risk profile of fixed interest investments when compared to cash, the M&G Corporate Bond Fund could be an ideal addition to your portfolio.

The fund, managed by Citywire A* rated Richard Woolnough, mainly invests in investment grade (higher-rated) corporate bonds. These are usually issued by established companies who 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. He combines this with in-depth analysis of the stocks themselves, drawing on the expertise of M&G’s credit analysis team to identify attractive investment opportunities.

Why choose the M&G Corporate Bond Fund?

• The 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 fixed and variable rate bonds issued by established companies, but may hold some government bonds where deemed appropriate.
• The fund’s manager, Citywire A* rated Richard Woolnough, joined M&G in January 2004 and has over 20 years experience managing corporate bond funds.
• Working in partnership with M&G’s in-house team of over 65 credit analysts, Richard holds independent views on bond issuers rather than having to rely solely on credit ratings agencies.
• The fund is ranked in the top 10% of the IMA £ Corporate Bond Sector over the past 3, 5 and 10 years. 
• M&G’s fixed income expertise was acknowledged when we were named ‘Best Fixed Interest Group’ for the third year running at the Professional Adviser Awards 2010.

How has the M&G Corporate Bond fund performed?

• The M&G Corporate Bond Fund has achieved a return of 31.0% over five years, outperforming its sector, the IMA £ Corporate Bond Sector, by 16.5%
• Over 10 years the fund returned 74.2%, outperforming its sector by 15.5%
• Since Richard Woolnough began managing the M&G Corporate Bond fund in February 2004, he has achieved a return of 44.0%, outperforming the sector by 16.6%.

Please remember that you should not base decisions on past performance, prices may fluctuate and you may not get back your original investment. 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. Overseas bonds may be affected by currency exchange rates. Up to £50,000** 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.

Source of all performance figures: Morningstar Inc., and M&G Statistics, bid to bid, net income reinvested, Sterling Class A Shares as at 30 July 2010.

*Citywire rating as at 31 July 2010. Ratings should not be taken as a recommendation

**The Financial Services Compensation Scheme as at 07.10.08