M&G Optimal Income FundWhy should you invest in this fund
About the fund manager
Fund objective and policy
Managed by Richard Woolnough, the fund can invest across a broad range of fixed interest assets. At each stage of the economic cycle Richard aims to be invested in those assets that collectively provide the most attractive, or ‘optimal’, income stream for the fund. He has the flexibility to move freely between government bonds, investment grade corporate bonds, and high yield corporate bonds, and can even invest a portion in equities when they appear to be more attractive than a company’s debt. Investment grade corporate bonds 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; high yield corporate bonds are issued by companies with a higher risk of default – they have a potential for higher returns, but at an increased default risk. Other assets accessible to him include investing in other funds and in derivatives*.
This means Richard can position the fund in the most favourable areas at each stage of the economic cycle, giving the M&G Optimal Income Fund the potential to outperform funds that are limited to one particular bond sector.
All of this makes this fund an attractive investment route to take in today’s ever-changing economic landscape.
| Single year performance (5 years ending January 2012) | |||||
| From
To | 31.01.11
31.01.12 | 29.01.10
31.01.11 | 30.01.09
29.01.10 | 31.01.08
30.01.09 | 31.01.07
31.01.08 |
| M&G Optimal Income Fund | +8.3% | +6.8% | +32.0% | -1.8% | +1.6% |
| IMA £ Strategic Bond Sector | +4.8% | +6.6% | +29.3% | -16.0% | -1.1% |
Please remember that you should not base decisions on past performance, prices may fluctuate and you may not get back your original investment.
Overseas investments may be affected by currency exchange rates. High yield bonds provide a greater risk to capital than investment grade corporate bonds. This fund provides a variable level of income. 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. 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.
The fund may enter into derivative transactions for investment purposes. Although the investment manager will select the counterparties with due skill and care, there will be residual risk that the counterparty may default on its obligations or become insolvent. The use of derivatives, which may include strategies designed to generate exposure to investments exceeding the net asset value of the fund, may expose the fund to volatile investment returns. This may increase the volatility of the fund’s net asset value.
Richard Woolnough joined M&G in January 2004. He is a fund manager on the M&G retail fixed interest team. Richard began his career at Lloyds Merchant Bank in 1985, moving to Italian Bank Assicurazioni Generali two years later, followed by SG Warburg. In 1995, he was recruited by Old Mutual to manage a £550 million investment grade corporate bond portfolio. In 2000, he assumed responsibility for a new fund – the Old Mutual Corporate Bond Fund. Richard graduated from the London School of Economics with a BSc in economics.
In addition to the fund data that can be found by accessing the menu to the left of this page you may also wish to read the most up-to-date Key Investor Information Document, alongside the Important Information for Investors document (3 MB), which contain further fund information.
The fund aims to provide a total return to investors based on exposure to optimal income streams in investment markets. The Fund aims to provide a total return to investors through strategic asset allocation and specific stock selection. The Fund will be at least 50% invested in debt instruments, but may also invest in other assets including collective investment schemes, money market instruments, cash, near cash, deposits, equities and derivatives. Derivative instruments may be used for both investment purposes and efficient portfolio management.
Products available: ISA, OEIC & Savings Plan
Source of all performance figures: Morningstar Inc., and M&G Statistics, bid to bid, net income reinvested, Sterling Class A Shares as at 31 January 2012.
All ratings as at 31 January 2012. Ratings should not be taken as a recommendation.
*Derivatives are financial instruments that derive their value from those of other underlying instruments such as equities, interest rates, commodities or market indices. Derivatives can be used efficiently and effectively to gain exposure to, or to hedge against, changes in the value of the underlying investments.
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All investors can invest up to £10,680 in a tax-efficient ISA.
