M&G has unveiled the M&G strategic bond fund, an Oeic that will
invest mainly in investment-grade corporate bonds.
The fund was designed for Richard Woolnough, who has just joined
M&G from Old Mutual. Woolnough spent nine years at Old Mutual,
where he managed the corporate bond fund since its introduction in
2000. Data from Standard & Poor's shows this fund is ranked third
out of 63 funds since launch based on £1,000 invested on a
bid-to-bid basis with net income reinvested to January 12, 2004.
The fund will have been 60 and 80 holdings and when selecting
them Woolnough will draw heavily on M&G's credit analysis. He will
use the same investment process at M&G that he used during his
tenure at Old Mutual. There is no target yield and bonds will be
selected to produce the best total return.
To achieve this, at least 80 per cent will go into investment grade
bonds, with the remainder in other areas of fixed interest as market
conditions change. These areas include high yield corporate bonds,
gilts, asset-backed securities and overseas bonds.
This fund may suit cautious investors who are looking for a
reasonable level of income without the risk that a higher yield
portfolio would bring. On the downside, the dominance of
investment-grade bonds could limit the yield, but Woolnough may
focus on the bottom end of the investment-grade scale as interest
rates rise. The ability to invest up to 20 per cent in other areas of fixed
income could be useful in achieving a balance between enhancing
the yield and preserving the capital.
According to Standard & Poor's the M&G corporate bond fund is
ranked 43 out of 68 funds based on £1,000 invested on a bid-to-bid
basis with net income reinvested over three years to January 12,