M&G (Lux) Sustainable Allocation Fund

Objective and investment policy

Objective

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 typically invests in a mix of assets from anywhere in the world (including emerging markets) within the following net allocation ranges:

20-80% in bonds

20-60% in equities

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 may invest in China A-Shares and in Chinese bonds denominated in Renminbi. The fund invests in the above assets either directly or indirectly via derivatives or through other funds. A minimum of 70% of the fund is typically invested in assets denominated in euro or in other currencies hedged back to euro.

Other investment: The fund may invest up to 20% in other assets, including other funds and cash or assets that can be turned into cash quickly.

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 fund is actively managed. 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.

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.

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.

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.

The fund may invest in China A shares. Investments in assets from the People's Republic of China are subject to changeable political, regulatory and economic conditions, which may cause difficulties when selling or collecting income from these investments. In addition, such investment is made via the 'Stock Connects' systems, which may be more susceptible to clearing, settlement and counterparty risk. These factors could cause the fund to incur a loss.

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 informaton

The Fund allows for the extensive use of derivatives.

Fund Team

Maria Municchi

Maria Municchi - Fund manager

Maria Municchi is manager of the M&G (Lux) Sustainable Allocation Fund since launch. She is also deputy manager of the M&G (Lux) Income Allocation Fund and M&G Episode Income Fund (UK-authorised OEIC). Before joining M&G in 2009, Maria worked at Barings and UBS Asset Management. She has an MSc in international management and finance and is a CFA charterholder.

 Team member biography
Steven Andrew

Steven Andrew - Deputy Manager

Steven Andrew joined M&G in 2005 as a member of the portfolio strategy and risk team, before moving to the multi-asset team, where he helped to formulate asset allocation strategies for M&G's multi-asset fund range. In November 2010, Steven was appointed manager of the M&G Episode Income Fund (a UK-authorised OEIC). Three years later, he became manager of the M&G Income Allocation Fund upon its launch, a fund that merged into the M&G (Lux) Income Allocation Fund in March 2018. He was appointed deputy manager of the M&G (Lux) Sustainable Allocation Fund upon launch in November 2018. Steven began his career at the Bank of England in 1987 and subsequently worked at F&C Asset Management and Merrill Lynch before joining M&G. He holds a BSc (Hons) degree in financial economics from the University of London.

 Team member biography