At M&G, our multi-asset team have been managing dynamic and diversified portfolios for over 15 years. By combining behavioural finance, a valuation approach, and macroeconomic research, the team has created a unique and distinctive “episode” investment philosophy. 

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.

• Valuation Framework
• Dynamic asset allocation
• Asset class diversification

Source: M&G 2018, for illustrative purposes only. The green columns show the expected return or real yield from each type of asset. The grey neutrality band is the level where the fund managers perceive the real yield to be a ‘fair’ reflection of the asset’s underlying value. Please note that this chart represents just the starting point for the team’s investment process and that behavioural finance insights are crucial to its interpretation. M&G does not have house views.

The valuation framework is key to determining whether to trade an asset. If an asset’s real yield is above or below neutrality this can point to an abnormality in the market or a price movement caused by human behavioural factors. This could create an opportunity for investment.

Source: M&G, Datastream, 31 December 2017.

Past performance is not a guide to future performance.

Dynamic asset allocation is achieved by identifying and exploiting opportunities created during ‘episodes’. M&G’s Multi Asset team developed their ‘episode’ investment approach based on the understanding that human behaviour means markets often do strange and unpredictable things.

All the funds in the range are genuine multi-asset funds with the freedom to exploit opportunities across the global investment universe.

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.

• Brexit
  
  
  
• The election of Donald Trump
  
  
• Weakness in the Mexican peso
  
  

10% 20% 70%

10% 40% 50%

10% 30% 60%

The pie charts above show the neutral positions of the funds if all assets were trading at their 'fair value'. This can be thought of as a strategic asset allocation. In an ideal world, when all assets were trading at their 'fair value', then neutrality would be how a fund was positioned, given its strategy and risk profile. However, assets seldom trade at fair value, so the actual allocation of each fund may not match the neutral position.

The M&G (Lux) Dynamic Allocation Fund, M&G (Lux) Conservative Allocation Fund and M&G (Lux) Income Allocation Fund, Luxembourg SICAV funds, launched on 16 January 2018. On 16 March 2018, the M&G Dynamic Allocation Fund, M&G Prudent Allocation Fund and M&G Income Allocation Fund, (UK stand-alone authorised UCITS) merged into the respective SICAV funds. The SICAV funds are run by the same fund managers, applying the same investment strategy, as the respective UCITS funds.

The funds allow for the extensive use of derivatives.