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M&G moves to stem flows in Woolnough’s corporate bond funds

M&G is looking at ways to stem inflows into Richard Woolnough’s £6.3bn Corporate Bond and £5.1bn Strategic Corporate Bond funds.

Both funds are big IFA favourites in the corporate bond sector. Woolnough says the rapidly growing size of the funds has made it more difficult to implement his investment views, but he has “coped” with inflows.

He says: “With respect to the investment-grade bond funds, we think it is in the interests of existing holders of the funds to explore options to slow the inflow of new money that comes into the funds to control the growth of the funds.”

Both funds remain open to investors while the group explores ways to stem flows.

The M&G Corporate Bond and Strategic Corporate Bond are both third quartile in the Investment Management Association Corporate Bond sector over three years, having returned 36.6 and 36.3 per cent respectively over that period. This compares to a sector average of 37.1 per cent.

The FSA recently sent a letter to corporate bond fund managers asking them what risk controls and monitoring they have in place to manage large scale redemptions in the face of low market liquidity.

Chelsea Financial Services managing director Darius McDermott says: “ We think it is a good decision to protect those many existing investors who have supported the fund over the years.”

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