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‘Pull something special out of the hat’

Specialist funds that focus on specific themes and investment opportunities are the key to producing positive returns in difficult market conditions, says M&G multi-manager David Jane.

Jane, who runs the M&G cautious multi-asset fund, says he does not want to hold funds that provide general market exposure in an environment where all markets have fallen due to deleveraging.

He believes multi-managers now need to dig deep, playing both sectors and styles rather than taking a general approach across regional asset classes.

The M&G cautious multi-asset fund is designed to produce positive returns over the long term while smoothing out volatility by diversifying across different asset classes.

According to data from Morningstar, the fund has delivered first-quartile performance over the year to date on a bid-to-bid basis with net income reinvested as at June 20, 2008.

Jane says the fund’s broad remit has been an advantage in the credit crunch, as it has been able to invest directly in commodities and diversify across the few asset classes that have been going up.

In contrast, Jane says the opportunity to make such active asset allocation decisions has not been available to managers of funds that do not take a multi-asset approach.

Jane says: “We achieved positive absolute returns in the second quarter due to the active decisions we have made and we are pleased with the outcome. We have been cautious on equities but focused on areas that are attractive such as mining, oil and defensive sectors. We are cautious in fixed income and there is a lot of cash and commodities exposure in the fund.

“Right now, my job is to protect investors’ capital and grind out returns which we have managed to do while the market has been rubbish.”

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