M&G Recovery Fund 40

A history of award-winning growth

23 May 2009 marked 40 years since the M&G Recovery Fund was launched as a vehicle for investors to grow their long-term savings through exposure to the UK stockmarket. Today, it is one of the largest and most successful funds of its type in the UK.

The fund doesn’t follow stockmarket trends; rather, it focuses on the performance and potential of individual companies – companies facing challenges but with good long-term recovery potential, which has not yet been spotted by the market.

Citywire AAA* rated fund manager Tom Dobell has spent the last 10 years seeking out and investing in such companies with solvable or transitory problems, such as those that are financially stretched, or which have a strong market position, but need a change in strategic direction. In-depth analysis is used not only to determine which companies show real promise but also to help them realise their full potential as Tom works closely with the management once invested in the company. In times of market uncertainty, it could pay to consider this tried and tested investment strategy.

The Recovery Cycle:
The fund looks at the recovery process as a four-stage cycle, as shown below.

Companies are usually held throughout the cycle, for example some may be in difficulty and unloved by the market, while others are completing their recovery.

Why choose the M&G Recovery Fund?

• The M&G Recovery Fund is focused on corporate and not economic recovery – a strategy designed to seek out investment opportunities whatever the market conditions.
• It has a proven and unchanged philosophy of investing in unloved and undervalued companies.
• The fund was launched in 1969 and has achieved an average annual return of 15.7% throughout its 40 year history, compared with a return of 11.0% for the FTSE All-Share Index for the same period.
• The Fund is ranked in the top 25% of the IMA UK All Companies Sector, over the past year, and in the top 10% over the past 2, 3, 4, 5, 6, 7, 8, 9 and 10 years.
• The strategy behind the M&G Recovery Fund is one of consistency – the fund has only ever had three managers at the helm since its launch 40 years ago.
• Tom is the longest standing Citywire AAA* rated fund manager, having held the rating for 56 consecutive months.**
• Tom also benefits from the support of an experienced, hands-on corporate finance team, working closely to develop and maintain a constructive, two-way dialogue with the companies in which he invests.

How has the M&G Recovery Fund performed?

• Under Tom Dobell’s management it is the only fund in the IMA UK All Companies sector to have outperformed the FTSE All-Share Index every year for the last ten calendar years.
• The M&G Recovery Fund has achieved a return of 75.4% over five years, outperforming its sector, the IMA UK All Companies Sector, by 35.4%
• Over 10 years the fund returned 84.4% outperforming its sector by 59.8%
• Since Tom Dobell began managing the fund in March 2000, he has achieved a return of 94.4%, outperforming the sector by 63.8%.

Please remember that you should not base decisions on past performance, prices may fluctuate and you may not get back your original investment. Overseas shares may be affected by currency exchange rates.

Source of all performance figures: Morningstar Inc., and M&G Statistics, bid to bid, net income reinvested, Sterling Class A Shares as at 31 December 2009.

*Citywire rating as at 31 December 2009. Ratings should not be taken as a recommendation.

**Source: Citywire as at 31.12.09