M&G offering UK inflation-linked corporate fund deal
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M&G Investments has launched its UK inflation-linked corporate bond fund, which is co-managed by Jim Leaviss, the head of the retail fixed-interest team, and Ben Lord.
Apart from inflation-linked corporate bonds, the fund can also invest in other fixed-interest securities such as floating rate notes. In addition, it can hold a combination of assets, including government securities and derivatives, whose returns behave in the same way as inflation-linked corporate bonds.
Among the 150 names in the portfolio are direct holdings in more than 30 issuers. These include, for example, Tesco, Thames Water and Toyota. The overall credit weighting is Aand the duration stands at 3.4 years. At launch, 55 per cent of the funds will be in index-linked corporate bonds held by blue-chip companies, with a further 22 per cent in index-linked gilts.
However, M&G says this breakdown will alter over time as the economic environment changes.
Annual management fee for sterling A class shares is 1 per cent and initial fee is 3 per cent. Minimum initial investment is £500 for lump sums and £10 for regular monthly contributions.
Informed Choice managing director Martin Bamford says: “It is probably a sensible piece of marketing as we often see fund launches on the back of market demands or fear that inflation is a concern in the medium term. There is bound to be demand and I think other leading fund managers will look at it.”
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