x M&G (Lux) Absolute Return Bond Fund

M&G (Lux) Absolute Return Bond Fund

ISIN
LU1531596291

Price (11.12.2019)
9.82

% Price Change
0.04

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income of at least the 3-month Euribor plus 2.5% a year, before any Ongoing Charges, over any three-year period. The 3-month Euribor is the rate at which banks borrow money from each other. The fund aims to achieve this while seeking to limit losses and minimise the degree to which the value of its assets changes over time. Managing the fund in this way reduces its ability to achieve returns significantly above 3-month Euribor plus 2.5%.

Investment policy and strategy

Core investment: At least 70% of the fund is invested, typically directly, in bonds, currencies, cash and near cash. These assets may be issued anywhere in the world, including emerging markets, and denominated in any currency. Up to 60% of the fund may be invested in lower quality bonds. The fund may also invest in Chinese bonds denominated in Renminbi.

Other investment: The fund may invest in asset-backed securities, contingent convertible debt securities and in other funds.

Derivatives: The fund may invest via derivatives and use derivatives with the aim of reducing the risks and costs of managing the fund.

Strategy in brief: The investment manager takes a flexible approach, investing across different bond markets and currencies according to where value is identified. The investment manager has the freedom to adjust the fund’s sensitivity to interest rate movements, as well as the blend of bond and currency exposures based on an assessment of macroeconomic, asset, sector and stock-level factors. The fund will typically aim to have a high level of diversification in individual bond selection and across investment themes and sources of return. The investment manager seeks to achieve the performance objective while managing the fund’s volatility and limiting losses during difficult market conditions.

Performance comparator: The fund is actively managed. The 3-month Euribor plus 2.5% is a point of reference against which the performance of the fund is measured.

Risks associated with the fund

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.

An ‘absolute return’ fund may not move in line with market trends or fully benefit from a positive market environment.

The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset’s value vary in an unexpected way, the fund will incur a loss. The fund’s use of derivatives may be extensive and exceed the value of its assets (leverage). This has the effect of magnifying the size of losses and gains, resulting in greater fluctuations in the value of the fund.

The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.

Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.

The hedging process seeks to minimise, but cannot eliminate, the effect of movements in exchange rates on the performance of the hedged share class. Hedging also limits the ability to gain from favourable movements in exchange rates.

Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.

Investing in bonds from China, denominated in Renminbi and traded on the China Interbank Bond Market, may be subject to greater clearing, settlement and counterparty risk. These factors could cause the fund to incur a loss.

In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.

The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.

Further details of the risks that apply to the fund can be found in the fund's Prospectus.

Other information

The Fund allows for the extensive use of derivatives.

Fund Team

Jim Leaviss

Jim Leaviss - Fund manager

Jim Leaviss is Head of M&G's Wholesale Fixed Income team, joining M&G in 1997 after five years at the Bank of England. As well as heading up the team, Jim also manages the M&G (Lux) Global Macro Bond Fund and is co-manager of the M&G (Lux) Absolute Return Bond Fund and deputy manager of the M&G Global Government Bond Fund (UK-authorised OEIC).

 Team member biography
Wolfgang Bauer

Wolfgang Bauer - Co-manager

Wolfgang Bauer is manager of the M&G (Lux) European Inflation Linked Corporate Bond Fund and co-manager of the M&G (Lux) Absolute Return Bond Fund. He is also deputy manager of the M&G (Lux) Global Corporate Bond Fund and the M&G (Lux) Euro Corporate Bond Fund. Wolfgang joined M&G in 2012 as part of the Investment Graduate Programme, becoming part of M&G's Wholesale Fixed Income team in January 2014, focusing on US investment grade credit. Wolfgang gained a PhD in chemistry from the University of Cambridge and is a CFA and CAIA charterholder.

 Team member biography

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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.