Bestinvest says
Investing in a range of fixed interest securities this fund should perform well when inflation is high or rising. It benefits from an experienced fixed interest team at M&G and is likely to deliver a yield premium to index linked gilts. Generally speaking we expect this fund to be less volatile than traditional index linked gilts as it is deliberately structured to minimise sensitivity to changes in real interest rates.
The fund invests mainly in investment grade inflation-linked corporate bonds, floating rate notes (including asset backed securities) and other short dated fixed income instruments (including bonds not linked to inflation). Derivatives may be used in pursuit of the fund objective and for efficient portfolio management purposes. Index linked corporate bond exposure may also be achieved indirectly by investing in a combination of index linked gilts and credit derivatives. Generally speaking where non sterling securities are purchased these will be hedged to £. Fund duration will be kept deliberately short in order to minimise sensitivity to changes in real yields and maximise sensitivity to inflation outcomes.