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M&G Strategic Corporate Bond Class I - Accumulation (GBP)

Sell:1,476.36p Buy:1,476.36p Change: 3.36p (0.23%)
Prices as at 24 January 2022
Change: 3.36p (0.23%)
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
Prices as at 24 January 2022
Change: 3.36p (0.23%)
Prices as at 24 January 2022
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

Our view on this Fund

This fund does not feature on the Wealth Shortlist of funds our analysts believe have the potential to outperform their peers over the long term. This is not a recommendation to sell; however, if you are thinking of adding to your investments, we believe the Wealth Shortlist is a good place to start. View funds on the Wealth Shortlist »

Richard Woolnough is a seasoned bond investor with a good track record. We like his pragmatic approach and willingness to be as flexible as possible. He typically errs on the side of caution and this more defensive approach has seen the fund perform well versus other corporate bond funds in tougher times, but look more pedestrian in stronger periods. This isn't a guide to how the fund will perform in future though.

It's a decent corporate bond fund that we think has good long-term prospects. But there are other funds in this sector with managers we rate at least as highly, and with lower ongoing charges.

Our view on the sector

Funds in this sector invest mainly in 'investment grade bonds'. These are issued by companies that are more likely to be able to repay their debts to bondholders. As such, they tend to offer lower yields than bonds issued by companies that are less likely to be able to pay off their debts. Corporate bonds have generally performed well since the 2008 financial crisis. With interest rates on cash so low, they've appealed to income investors. This has pushed up bond prices, but means their yields have also fallen. Some suggest there is now less value in this area of the market. We think that with interest rates likely to stay lower for longer, a corporate bond fund could be a good addition to a diversified portfolio invested to generate income.

Performance Analysis

Long-term performance has been good. The fund's strength has been to provide shelter when markets are falling and lag behind a rising market.

The fund did particularly well in 2008 as the financial crisis bit, but in the strong markets we've seen over recent years it hasn't performed as well. We still think it will do well over the long-term, including offering some shelter if bond markets hit a tough patch.

Investment Philosophy

Richard Woolnough thinks the key to successful bond investing is to avoid bonds that fail to make all the payments due to investors. It's a conservative approach but bonds that default can have a big impact on performance. Returns come from both income and growth.

Process and Portfolio Construction

At least 70% of the fund will be invested in corporate bonds. The manager can also invest in other areas such as government bonds and higher-risk high-yield bonds.

Woolnough invests in bonds issued by UK and overseas companies, including across Europe and in the US. He uses derivatives to remove some of the foreign currency risk and make sure at least 80% of the fund is invested in sterling. Derivatives can add risk.

Looking at the performance of the overall economy helps Woolnough decide which parts of the market to invest in. An in depth analysis of the companies offering the bonds helps him avoid those he thinks could default. We think this company level analysis is a particular strength of the M&G team.

question mark Manager Track Record Based on HL Quantitative Research

  • Jupiter Investment Grade Bond...
  • IA £ Corporate Bond
  • M&G Strategic Corporate Bond...
  • IA £ Corporate Bond

Fund Track Record

21/01/17 to 21/01/18 21/01/18 to 21/01/19 21/01/19 to 21/01/20 21/01/20 to 21/01/21 21/01/21 to 21/01/22
Annual return 6.53% -2.65% 11.59% 4.97% -1.67%

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Fund Management Group Comment

M&G was established in 1931, and is today one of the largest active investors in the UK. In 1999 M&G was acquired by Prudential, one of the largest financial services providers in the UK and Europe. M&G is an autonomous business unit within the Prudential Group, retaining its own style but benefiting from the advantages of belonging to a large parent company.

M&G is not interested in chasing 'hot stocks' or market fashions. Its fund managers invest for the long term and have the freedom to think independently and act on their convictions. They are also backed by M&G's extensive experience and in-house research capabilities, across all key asset classes - equities, fixed interest and commercial property. One sector in which M&G has been particularly successful is in corporate bonds.

Information about the fund

Fund manager biography

manager photo
Manager Name: Richard Woolnough
Manager start date: 20 February 2004
Manager located in: london

Richard Woolnough joined M&G in January 2004 and is fund manager of the M&G Optimal Income Fund, the M&G Corporate Bond Fund and the M&G Strategic Corporate Bond Fund, three of the company's flagship fixed interest funds. Richard began his career at Lloyds Merchant Bank in 1985, moving to Italian insurer Assicurazioni Generali two years later, followed by SG Warburg. In 1995, he became a fund manager at Old Mutual. Richard graduated from the London School of Economics with a BSc in economics.

manager photo
Manager Name: Ben Lord
Manager start date: 1 January 2020
Manager located in: london

Ben Lord joined M&G in 2007 and was appointed fund manager of the M&G Global Corporate Bond Fund from launch in September 2013. He is also fund manager of the M&G UK Inflation Linked Corporate Bond Fund and deputy manager of the M&G European Inflation Linked Corporate Bond Fund, the M&G Strategic Corporate Bond Fund, the M&G Corporate Bond Fund and the M&G Short Dated Corporate Bond Fund. Ben previously worked at Gordian Knot as a credit analyst covering global financial institutions. He obtained an MA (Hons) from the University of Edinburgh and is a CFA charterholder.

Data policy - All information should be used for indicative purposes only. You should independently check data before making any investment decision. HL cannot guarantee that the data is accurate or complete, and accepts no responsibility for how it may be used. Benchmark data provided subject to this disclaimer.
You can buy or sell holdings in this fund through a Stocks and Shares ISA, Lifetime ISA, SIPP or Fund and Share Account