M&G Optimal Income I

Unconstrained strategic bond fund investing across the asset class according to prevailing market conditions.

  • 150.00p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • 236.87p
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 1.00% 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.75%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.91%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 2.50%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 23 November 2020, fund data last updated 27 February 2012

The fund aims to provide a total return by investing across the full fixed interest spectrum, including investment grade and high yield corporate bonds as well as government bonds. The manager also makes use of derivatives and unusually may include some equity exposure. The fund aims to outperform the IA Strategic Bond sector average but has no yield target. The manager takes a primarily top-down approach, positioning the fund across the asset class according to prevailing market conditions. Bonds issued by major governments and companies will be more stable than those issued by emerging markets or smaller corporate issuers; in the event of an issuer experiencing financial difficulty, there may be a risk to some or all of the capital invested. Any historical or current yields quoted should not be considered reliable indicators of future performance.

Fund summary

Sector £ Strategic Bond
Structure OEIC
Launched December, 2006
Size £2,440m
Yield 2.50%
Charging basis Income
Dividends paid May & Nov

Charges

Standard initial charge 1.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.91%

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Investment process

The Fund aims to provide a total return to investors through strategic asset allocation and specific stock selection. The fund may invest across the range of fixed income asset classes, including high yield, investment grade, government bonds and structured products; the fund may also include a modest allocation to blue chip equities. In addition the manager may use derivative instruments such as CDS, futures and options both for investment purposes and efficient portfolio management, however these instruments will generally not be used to apply notional leverage to credit exposure in the fund. The manager applies a top-down macro economic investment approach in order to determine the overall degree of credit and duration risk he wants to take in the portfolio and combines this with a bottom-up approach to select individual securities. Non sterling currency exposure is usually limited to about 5% of NAV.

A manager with a strong track record across all market conditions and fixed income mandates; combined with the resources of the M&G Group, make this a powerful investment proposition. This is Richard Woolnough’s most flexible mandate and makes extensive use of derivatives, so it should be considered more aggressive than his other funds, M&G Strategic Corporate Bond and M&G Corporate Bond.

Manager research

Average monthly relative returns

  • 15/16 -0.20%
  • 16/17 -0.02%
  • 17/18 -0.04%
  • 18/19 -0.14%
  • 19/20 -0.06%

Bestinvest MRI

  • 3 years -0.08%
  • 5 years -0.09%
  • Career 0.00%
  • 3 years 36.70%
  • 5 years 29.80%
  • Career 92.90%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Richard Woolnough

Woolnough gained a degree in economics from the London School of Economics between 1982 and 1985. On graduating he joined Lloyds merchant bank as a trainee gilt salesman, moving to Prudential-Bache securities as a gilt salesman following the "Big Bang". He began working in the fixed interest arena in 1987, joining Assicurazioni Generali as a manager of equities and sterling bonds. In 1993 he joined SG Warburg as a member of their sterling bond trading team. He moved out of London to join Old Mutual in 1995 where he was recruited to run a sterling based annuity portfolio. He ran the Old Mutual Corporate Bond fund from launch in the summer of 2000 before moving to M&G in January 2004, where he is a fund manager on the fixed interest desk.

Track record

Richard Woolnough has 20 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -00%. During the worst period of relative performance (from March 2009 - March 2020) there was a decline of 17% relative to the index. The worst absolute loss has been 9%.

Periods of worst performance

Absolute -9.00% (January 2020 - March 2020)
Relative -17.00% (March 2009 - March 2020)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 31 July 2020

2.81% Germany(Federal Republic Of) 0% Bds 13/10/23 Eur0.01
2.5409% Germany(Federal Republic Of) Frn 15/04/30 Eur1000
2.5068% Deutschland I/L Bond 0.1% Bds 15/04/26 Eur0.01
2.0183% Germany(Federal Republic Of) 2% Bds 15/08/23 Eur0.01
1.9182% Germany(Federal Republic Of) 1.75% Bds 04/07/22 Eur0.01
1.8579% Germany(Federal Republic Of) 0% Bds 07/10/22 Eur1000
1.8322% Germany(Federal Republic Of) 0.1% Bds 15/04/23 Eur0.01
1.5689% Germany(Federal Republic Of) 0.5% Bds 15/02/26 Eur0.01
1.5286% Germany(Federal Republic Of) 0% Bds 15/08/26 Eur0.01
1.3772% Microsoft Corp 2.675% Bds 01/06/60 Usd2000
Source: Trustnet

Sector breakdown

Government Bonds 25.00%
Consumer Goods 10.00%
Telecommunications 7.00%
Banks 7.00%
Automotive 5.00%
Insurance 4.00%
Technology 4.00%
Asset/Mortgage-Backed Securities 4.00%
Basic Industries 4.00%
Health Care 4.00%

Portfolio

350-400 securities. Anticipated duration range 0-9 yrs.

Constraints

No limit on investment grade corporate or government bond exposure. No formal limit to high yield exposure but we would not expect this to exceed 50% of NAV. Max 20% in equities (typically 5%).

Key Investor Information - Income

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Key Investor Information - Accumulation

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