The fund aims to provide combined capital growth and income of 4-8% per year over any five-year period, while considering environmental, social and governance (ESG) factors.
Investment policy and strategy
Core investment: The fund invests globally (including emerging markets), typically as follows:
- 20-80% in bonds
- 20-60% in equities
- 0-20% in other assets
Assets are selected that meet the investment manager’s assessment of ESG factors and impact criteria. 10-30% of the fund is invested in companies that have a positive impact on society by addressing the world’s social and environmental challenges, based on M&G’s impact assessment methodology.
Companies deemed to be in breach of the United Nations Global Compact principles and/or involved in industries such as the production of tobacco or controversial weapons are excluded from the investment universe.
The fund typically invests directly. It may also invest via derivatives or other funds.
At least 70% of the fund is normally invested in assets valued in euro or in currencies hedged into euro.
Derivatives: Derivatives are used for investment purposes, to reduce risk and costs, and to manage the impact of currency movements.
For more information on the types of bonds held and derivatives used, please refer to the Prospectus.
Strategy in brief: The approach to sustainable investment is through flexible asset allocation, implemented by investing in securities of companies or governments that uphold high standards of ESG behaviour. The approach combines research to work out the ‘fair’ value of assets over the long term with analysis of the economic fundamentals and market’s short-term reactions to events, to identify investment opportunities.
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.
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 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.
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.
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.
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.
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.
The Fund allows for the extensive use of derivatives.