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M&G Strategic Corporate delivers award winning performance

M&G's Strategic Corporate Bond Fund's strong performance helped it win the award for best bond fund at Investors Chronicle's first fund awards
April 30, 2012

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.

66.68p

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.

M&G STRATEGIC CORPORATE BOND FUND A Inc (GB0033828020)

PRICE:66.68pMEAN RETURN:12.18%
IMA SECTOR:Sterling corporate bondSHARPE RATIO:2.35
FUND TYPE:Open-ended investment company1-YEAR PERFORMANCE:8.05%
FUND SIZE:£4.85bn3-YEAR ANNUALISED PERFORMANCE:12.17%
No OF HOLDINGS:7175-YEAR ANNUALISED PERFORMANCE:9.44%
SET UP DATE:20 February 2004TOTAL EXPENSE RATIO:1.16%
MANAGER START DATE:20 February 2004YIELD:3.85%
TURNOVER:143.5%*MINIMUM INVESTMENT:£500
STANDARD DEVIATION:4.93%MORE DETAILS:mandg.co.uk

Source: Morningstar & *M&G

Performance data as at 30 April 2012

Top 10 issuers as at 31 March 2012

Lloyds Banking2.6
Granite Master Issuer2.3
EDF Energy2.1
BAA2.1
JP Morgan2.0
Wal-Mart2.0
HSBC1.8
Imperial Tobacco1.7
Tesco1.6
Deutsche Telekom1.5

Credit rating breakdown

AAA10.9
AA7.1
A32.4
BBB38.7
BB4.9
B2.0
No rating2.1
Cash1.9