The majority of positions in the M&G Episode Income fund are selected for income, but manager Steve Andrew is also able to make some short-term tactical calls.
He first took a short-term position in Korean equities based on the belief that the asset was “undervalued”, following a knock-on impact from the negative sentiment surrounding China.
The latest fund update from M&G reveals the position in Korean equities went on to prove the biggest driver of performance during October after a rally in the Korean market.
Andrew says: “Korean equities benefitted from both positive sentiment around the end of the US government shutdown and some stronger economic data releases for a number of Asian economies, especially China.
But Andrew believes this period of strong performance has led to the asset becoming “less attractive”, so he has opted to take profits in the position. He adds: “Korea remains an attractive market longer term, but given the extent of its improvement since we bought it, we feel it is an important discipline to realise the value of such tactical exposures when the opportunity arises, especially in typically more volatile markets such as Korea.”
Wordwide Financial Planning IFA Nick McBreen says: “Quality fund managers can be making active decisions like this daily. That is a mark of a manager who is on his game, looking for opportunities.
“It can sometimes go wrong but tactical is about relatively small positions which can add value to the fund.”