Global Floating Rate High Yield Fund

Objective and investment policy

Objective

The fund aims to grow capital and provide income.

Investment policy and strategy

Core investment: Typically, around 70% of the fund is invested in high yield floating rate notes (FRNs) issued by companies from anywhere in the world. The FRNs are held directly and indirectly through derivatives combined with government bonds. The fund invests in asset-backed securities as well. 

Other investments: The fund also holds other assets, including bonds issued by governments and cash. 

Use of derivatives: Derivatives may be used to gain exposure to core and other investments, to reduce risks and costs and to manage the impact of changes in currency exchange rates on the fund’s investments. 

Strategy in brief: The fund is designed to provide income while minimising the negative impact of rising interest rates by investing mainly in FRNs. The fund focuses on FRNs issued by companies with a low credit rating, which typically pay higher levels of interest to compensate investors for the greater risk of default.

Part of the fund may be invested in other fixed income assets, such as government bonds. Spreading investments across issuers, industries and countries is an essential element of the fund’s strategy and the manager is assisted in his selection of individual bonds by an in-house team of credit analysts. 

Glossary terms 

Asset-backed securities: Bonds backed by assets that produce cashflows, such as mortgage loans, credit card receivables and auto loans. 

Bonds: Loans to governments and companies that pay interest. 

Derivatives: Financial contracts whose value is derived from other assets. 

Floating rate notes (FRNs): Bonds whose interest payments, or coupons, are adjusted in line with movements in interest rates. 

High yield Bonds: Bonds issued by companies considered to be riskier and therefore generally paying a higher level of interest.

Risks associated with the fund

The value of investments and the income from them will rise and fall. This will cause the fund price, as well as any income paid by the fund, to fall as well as rise. There is no guarantee the fund will achieve its objective, and you may not get back the amount you originally invested.

The value of the fund may fall if the issuer of a fixed income security held is unable to pay income payments or repay its debt (known as a default).

The fund may use derivatives with the aim of profiting from a rise or a fall in the value of an asset (for example, a company’s bonds). However, if the asset’s value varies in a different manner, the fund may incur a loss.

The fund invests mainly in one type of asset. This type of fund can experience larger-than-average price changes when compared to a fund which invests in a broader range of assets.

Changes in currency exchange rates will affect the value of your investment.

If the share class is hedged (H share class), it aims to mirror the performance of another share class. We cannot guarantee that the hedging objective will be achieved. The hedging strategy will limit holders of the hedged share class from benefiting if the hedged share class currency falls against the US dollar.

The fund will invest in emerging markets which are generally smaller, more sensitive to economic and political factors, and where investments are less easily bought and sold. In exceptional circumstances, the fund may encounter difficulties when selling or collecting income from these investments, which could cause the fund to incur a loss. In extreme circumstances, it could lead to the temporary suspension of dealing in shares in the fund.

When interest rates rise, the value of the fund is likely to fall.

Where market conditions make it hard to sell the fund’s investments at a fair price to meet customers’ sale requests, we may temporarily suspend dealing in the fund’s shares.

Some transactions the fund makes, such as placing cash on deposit, require the use of other financial institutions (for example, banks). If one of these institutions defaults on their obligations or becomes insolvent, the fund may incur a loss.

Other information

The Fund allows for the extensive use of derivatives.

Performance

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested. The level of any income earned by the fund will fluctuate. Past performance is not a guide to future performance. 

Source: Price: State Street. Performance: Morningstar. Performance figures are on a price to price basis with income reinvested. Performance figures may not reflect all relevant charges.

Please note that the Morningstar Category performance data in this tool where shown, is from the default Morningstar database, which contains all the share classes for each fund available across Europe, Asia and Africa. This can differ from the comparative sector data in M&G factsheets which is from the same database, but showing only the most appropriate share class to represent each fund, and for just those funds available in Europe. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information.

 

Fund Team

James Tomlins

James Tomlins - Fund manager

James Tomlins joined M&G in June 2011 and was appointed fund manager of the M&G European High Yield Bond Fund later that year. In January 2014, he became co-manager of the M&G Global High Yield Bond Fund after two years as deputy manager on the fund. James has also managed the M&G Global Floating Rate High Yield Fund since its launch in September 2014. James is a specialist in high yield credit with more than 10 years’ experience in this sector. He was previously an analyst and then a fund manager at Cazenove Capital Management. Before Cazenove, James was at KBC Alternative Investment Management; in the three years prior to that, he worked at Merrill Lynch Investment Managers. James is a CFA charterholder. He graduated with an MA in history and PgDip in economics from the University of Cambridge.

 Team member biography
Stefan Isaacs

Stefan Isaacs - Deputy Manager

Stefan Isaacs is Deputy Head of Retail Fixed Interest for M&G's mutual fund range. He joined M&G as a graduate in 2001 and was subsequently promoted to corporate bond dealer specialising in high yield bonds and euro-denominated credit. Stefan joined the fund management team in 2006 and was appointed fund manager of the M&G European Corporate Bond Fund in April 2007 and the M&G Global High Yield Bond Fund in October 2010. Stefan is also deputy fund manager of the M&G Optimal Income Fund, the M&G European High Yield Fund and the M&G Global Floating Rate High Yield Fund.

 Team member biography
Nicolo Carpaneda

Nicolo Carpaneda - Investment specialist

Nicolo Carpaneda joined M&G in 2012 and is investment director in the fixed income team. His role involves explaining the investment philosophy, process and performance of M&G’s retail fixed income fund range, as well as providing updates on overall financial market performance, investment trends and the economic outlook. Prior to joining M&G, Nicolo worked at Citigroup as an associate in the global markets & banking division, focusing on corporate finance and managing a number of multinational clients. He then joined Prudential on the group leadership programme as an internal consultant. Nicolo holds a degree in business administration and Master of Science (Msc) in management from Bocconi University (Italy) and an MBA from IE Business School (Spain). Nicolo is fluent in Italian, English and Spanish.

 Team member biography

Ratings

Rating is at a share class level

2 Star Rating

Need further information?

Cyveillance Protected

For Investment Professionals only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website. Content should therefore be shared responsibly with other investment professionals. The value of investments will fluctuate, which will cause fund prices to fall as well as rise and investors may not get back the original amount invested.