Despite its name, M&G Strategic Corporate Bond Fund has a fixed mandate of mainly holding investment grade corporate bonds, currently more than 80 per cent of the portfolio. However, up to 20 per cent of the portfolio can be invested in higher-yielding corporate bonds, government debt, convertibles and preference stocks, as well as money market instruments. The fund can also use derivatives to get exposure to corporate debt, and it has more investment freedom than some other corporate bond funds.
The fund has delivered strong long-term performance in a variety of economic conditions, placing it among the top five corporate bond funds over one and five years. This helped it recently win the best bond fund award at Investors Chronicle's first fund awards (read more on this). It also has a very reasonable total expense ratio of 1.16 per cent, cutting costs for investors.
The fund's manager, Richard Woolnough, chooses portfolio holdings largely by looking at economic factors. These help determine the kind of maturity he wants the investments to have and what sectors they are in.
He uses in-house research rather than external sources, drawing on M&G's team of credit analysts to look into specific details of the companies that issue the bonds, as a complement to his economic analysis. M&G has one of the largest credit analysis teams in Europe.
Mr Woolnough's success with this and other M&G funds has cemented his reputation as one of the UK's best-known and best-performing bond managers.
Source: Morningstar & *M&G
Performance data as at 30 April 2012
Top 10 issuers as at 31 March 2012
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Credit rating breakdown