M&G Global Macro Bond Class I - Accumulation (GBP)

Jim Leaviss has managed this fund with his current approach since January 2007. He has historically used the flexibility afforded to him well and he demonstrated this again in mid-2016 with his willingness to take a cautious approach in the run up to the UK's referendum on EU membership, and take advantage of volatility in the wake of the vote. He won't get it right every time, but we believe experience is vital for a manager of this type of fund and Jim Leaviss is one of the most experienced bond fund managers in the UK.

Historically, the fund's currency exposure has had a significant impact on returns, with performance boosted by exposure to the US dollar when it is strong against sterling. We expect the fund's currency exposure to be a key influence on performance going forward.

This fund has a flexible, 'go anywhere' mandate with the manager able to buy government bonds, investment grade corporate debt, higher-risk high-yield bonds, and higher-risk emerging market debt. The overall aim is to invest the portfolio in a diversified range of fixed interest assets and currencies to achieve the best possible return in the prevailing economic environment. There is no explicit performance target, but Jim Leaviss hopes to perform better than his IA Global Bond sector peers over three year periods.

Jim Leaviss starts with his 'bigger picture' outlook for economic growth, interest rates and inflation globally. This helps him determine how much to invest in different areas of the bond market, with the default position being: one-third in global government bonds, one-third in global investment grade corporate bonds, one-sixth in global higher-risk, high-yield bonds and one-sixth in higher-risk emerging market debt.

Broadly speaking, he is likely to have more invested in corporate and emerging market bonds when he is positive; and a greater proportion in government bonds when his outlook is cautious. He can also use derivatives to enhance returns. This allows him to quickly vary exposure to different types of bonds and currencies, as well benefit from falls in asset prices and rising interest rates (which are negative for bonds). He therefore has a lot of flexibility, but this can add risk.

While Jim Leaviss is responsible for the overall allocation to different types of bonds and currencies, he has the support of a talented and well-resourced team when it comes to selecting individual bonds. This includes Richard Woolnough, Ben Lord, Stefan Isaacs, and Claudia Calich (co-manager on M&G Global Macro Bond).