M&G (Lux) European Inflation Linked Corporate Bond Fund

ISIN
LU1582984149

Price (21.10.2019)
11.12

% Price Change
0.02

Objective and investment policy

Objective

The fund aims to provide a positive total return (combined income and capital growth) that matches or is greater than European inflation, as measured by Eurostat Eurozone Harmonised Index of Consumer Prices, over any three-year period.

Investment policy and strategy

Core investment: At least 50% of the fund is invested in inflation-linked investment grade corporate bonds.The fund may invest directly or indirectly by creating ‘synthetic’ bonds through the combination of inflation-linked government bonds and derivatives.

The fund may also use derivatives to reduce risk and costs and to manage the impact of changes in currency exchange rates on the fund’s investments.

Strategy in brief: The fund holds a range of bonds whose returns behave in a similar

way to inflation. However, the investment manager may seek alternative sources of

returns where it is felt that this will help achieve the fund’s objective. The investment

approach combines the assessment of macroeconomic factors with in-depth analysis

of the creditworthiness of individual bond issues. The fund manager will typically

invest in European bonds but may also invest in bonds issued outside of the region and

in other currencies, based on where value is identified. The fund manager will normally

hold at least 90% of the fund in Euros.

Other investment: The fund may also invest in cash and deposits, preferred shares,

other debt instruments, warrants and other funds.

Glossary terms

Bonds: Loans to governments and companies that pay interest.

Derivatives: Financial contracts whose value is derived from other assets.

Inflation-linked bonds: Bonds where both the value and the interest payments are adjusted in line with inflation until they are fully repaid.

Preferred shares: Shares which entitles the holder to a fixed dividend, whose payment takes priority over that of ordinary share dividends.

Warrants: Financial contracts that allow the fund manager to buy stocks for a fixed price until a certain date.

Risk indicator

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.

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 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 may lose as much as or more than the amount invested.

The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.

For accumulation shares, if inflation is low or zero, there is a risk that the fund’s expenses exceed the income it earns. If this happens, any shortfall will be taken from the fund’s capital and the fund's capital growth will be reduced.

This fund is subject to effective yield accounting. As a result, part of its capital inflation protection will be distributed to holders of income shares. Income shareholders will therefore, in effect, be receiving part of the capital protection as income.

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.

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. The fund may invest more than 35% in securities issued by any one or more of the governments listed in the fund prospectus.  Such exposure may be combined with the use of derivatives in pursuit of the fund objective.  It is currently envisaged that the fund’s exposure to such securities may exceed 35% in the German government, although this may vary subject only to those listed in the prospectus.

Performance

Past performance prior to 16 January 2018 is that of the M&G European Inflation Linked Corporate Bond Fund (a UK-authorised OEIC) which merged into this fund on 16 March 2018. Tax rates and charges may differ.


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. The level of any income earned by the fund will fluctuate. Past performance is not a guide to future performance. 

Source: Price: State Street. Performance: Morningstar. Performance figures are on a price to price basis with income reinvested. Performance figures may not reflect all relevant charges.

Please note that the Morningstar Category performance data in this tool where shown, is from the default Morningstar database, which contains all the share classes for each fund available across Europe, Asia and Africa. This can differ from the comparative sector data in M&G factsheets which is from the same database, but showing only the most appropriate share class to represent each fund, and for just those funds available in Europe. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information.

 

Fund Team

Wolfgang Bauer

Wolfgang Bauer - Fund 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
Carlo Putti

Carlo Putti - Investment specialist

Carlo Putti is an associate investment specialist providing support for the M&G retail fixed interest fund range. He initially joined M&G in 2009, working on a part-time basis in the M&G Milan office, assisting the Italian Sales team. In 2013 Carlo moved to London, where he joined the M&G International Marketing team as a marketing executive before transferring to the M&G Retail Fixed Interest team nine months later. Carlo holds a degree in business economics from Cattolica University (Italy).

 Team member biography

Ratings

Rating is at a share class level

1 Star Rating

Past performance prior to 16 January 2018 is that of the M&G European Inflation Linked Corporate Bond Fund (a UK-authorised OEIC) which merged into this fund on 16 March 2018. Tax rates and charges may differ.


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. The level of any income earned by the fund will fluctuate. Past performance is not a guide to future performance. 

Source: Price: State Street. Performance: Morningstar. Performance figures are on a price to price basis with income reinvested. Performance figures may not reflect all relevant charges.

Please note that the Morningstar Category performance data in this tool where shown, is from the default Morningstar database, which contains all the share classes for each fund available across Europe, Asia and Africa. This can differ from the comparative sector data in M&G factsheets which is from the same database, but showing only the most appropriate share class to represent each fund, and for just those funds available in Europe. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information.

 

For Investment Professionals only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website. Content should therefore be shared responsibly with other investment professionals. 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.