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M&G goes for multi-asset income

M&G’s income multi-asset fund aims for income and growth by investing globally in a range of asset classes such as equities, fixed interest and cash. It can invest in assets directly, indirectly through funds and  using derivatives. Commercial property funds and exchange-traded commodities may also feature in the portfolio.

Fund manager Steven Andrew believes that the multi-asset approach is the only way to provide a growing income while preserving capital. When managing this fund, Andrew will target an initial yield of 4 per cent. He will look for the best, sustainable income opportunities throughout the economic cycle, so will not be restricted to a single asset class.

Andrew joined M&G in 2005 and has been deputy manager of the M&G Cautious Multi Asset and M&G Managed Funds since November 2009. He previously worked for F&C Asset Management, Merrill Lynch and the Bank of England.

Investors looking for income may welcome this fund at a time when interest rates on cash deposits are low. The fund’s ability to generate income from a variety of sources around the world, with the flexibility to invest directly or indirectly in many assets, may appeal to investors. In contrast, equity income funds and bond funds that are used to provide income are restricted to specific markets, with no option to move to other asset classes that provide better opportunities as market conditions change.

However, the success of the fund will depend on Andrew selecting the best mix of assets and keeping on top of this asset allocation during changing market conditions. Competition may come from funds such as JPM multi-asset income, UBS multi asset income and the new Cazenove diversity income fund.

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