fund
This is one of our rated funds. They’re the ones our experts believe will do well for investors over the longer term. Top of the class!
M&G UK Inflation Linked Corporate Bond I
Aims to generate a return ahead of UK inflation over the medium to long term
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122.79p
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.
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131.08p
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?
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0.00%
Initial chargeSome 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!
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0.45%
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).
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0.45%
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.
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0.20%
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…
The Fund aims to protect the value of capital and income from inflation by generating a return consistent with or greater than UK inflation over the medium to long term by investing predominantly in a portfolio of index linked, quality corporate bonds. By investing in corporate bonds the manager is in a position to deliver a real yield premium to UK index linked gilts. The majority of returns from this vehicle are in the form of capital returns from indexation, income yields will be low. 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 | September, 2010 |
| Size | £723m |
| Yield | 0.20% |
| Charging basis | Income |
| Dividends paid |
Charges
| Standard initial charge | 0.00% |
| Initial charge via Bestinvest | 0.00% |
| Additional bid/offer spread | 0.00% |
| Annual management charge | 0.45% |
| Ongoing charges figure | 0.45% |
Allocation
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Investment process
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.
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. 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.
Manager research
Average monthly relative returns
- 16/17 0.00%
- 17/18 0.00%
- 18/19 0.62%
- 19/20 -0.05%
- 20/21 0.00%
Bestinvest MRI
- 3 years 0.00%
- 5 years 0.00%
- Career 0.17%
- 3 years 0.00%
- 5 years 0.00%
- Career 94.40%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.
Ben Lord
Lord joined M&G in 2007 as a portfolio manager within the Retail Fixed Interest team. He previously worked as a credit analyst for a number of financial institutions and across a wide range of markets, including North America, Australia and Europe. He obtained an MA (Hons) from the University of Edinburgh and is a CFA charterholder.
Track record
Ben Lord has 2.9 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.17%. During the worst period of relative performance (from February 2009 - March 2009) there was a decline of 3% relative to the index. The worst absolute loss has been 3%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 94%.
Periods of worst performance
| Absolute | -3.00% (February 2009 - March 2009) |
| Relative | -3.00% (February 2009 - March 2009) |
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
| 28.7741% | Hm Treasury United Kingdom Dmo 2.5% Idx Lkd Gilt 17/07/24 Gbp0.01 |
| 18.8004% | Hm Treasury United Kingdom Dmo 0.125% Idx Gilt 22/03/24 Gbp0.01 |
| 5.6324% | Hm Treasury United Kingdom Dmo 1.875% Idx Lkd Gilt 22/11/22 Gbp |
| 3.1994% | Tesco 3.322% Idx Lkd Nts 05/11/25 Gbp |
| 3.0605% | Northern Trust Sterling E |
| 2.5078% | United States Of Amer Treas Notes 0.125% Tb 15/07/24 Usd1000 |
| 2.0914% | Upjohn Finance Bv 1.023% Bds 23/06/24 Eur100000 |
| 1.5732% | Deutsche Pfandbriefbank Ag 1.75% Bds 21/11/22 Gbp100000 |
| 1.5402% | Orsted A/S Iln 16/05/34(Orsted A/S)Gbp100000 |
| 1.4623% | Nationwide Building Society 3.875% Ln Stk 30/07/21 Gbp1 |
| Source: Trustnet |
Sector breakdown
| Banks | 28.00% |
| Government Bonds | 24.00% |
| Investment Grade Bonds | 14.00% |
| Energy | 5.00% |
| Asset/Mortgage-Backed Securities | 4.00% |
| Asset/Mortgage-Backed Securities | 3.00% |
| Retail | 3.00% |
| Health Care | 3.00% |
| Money Market | 3.00% |
| Consumer Goods | 3.00% |
Constraints
Max exposure to high yield bonds 20%. Fund duration is unlikely to be greater than 5yrs and maybe as low as negative 1yr.