M&G Global Basics - change is afoot

• Fund to change name to M&G Global Themes, subject to shareholder approval
• Investment policy relaxed, removing a requirement for the fund to invest at least 70% of the portfolio in basic industries, such as mining and manufacturing
• While experienced in resources and precious metals, the manager does not have a prolonged track record managing a broader portfolio of global equities

Proposed changes

M&G intend to rename its Global Basics Fund to M&G Global Themes. The investment strategy will also change and the requirement to invest at least 70% of the portfolio in basic industries, such as mining and manufacturing, will be removed.

Assuming the change is approved by shareholders, Jamie Horvat, the fund’s manager, will have the flexibility to invest with no restriction on sector, company size or geography, although the fund will be required to have at least 80% in global equities. The fund’s long-standing objective to exploit global structural change remains intact, but M&G hope a more relaxed investment strategy will allow Jamie Horvat to take full advantage of the wider themes developing across the global economy. The manager is particularly keen to invest in companies set to benefit from increased demand for healthcare and medicines to support ageing populations; water and waste management; clean energy; and cyber-security.

The fund’s benchmark will change to the MSCI All Country World Index to better reflect the new investment universe. M&G also plan to shift the focus towards a balance of income and capital growth returns, from a previous focus on capital growth only.

Our view

The fund has been through several changes over the past five years including two changes to the fund manager. Most recently Jamie Horvat took over as lead manager on 18 December 2015, at which point Randeep Somel, the fund's previous lead manager, assumed the role of co-manager.

Jamie Horvat has over 16 years' investment experience and has previously specialised in Canadian equities and the resources and precious metals sectors. He does not, however, have a prolonged track record in managing a broader portfolio of global equities. While the fund’s performance has improved over Jamie Horvat’s tenure, returns under its current investment policy have tended to be poor and we feel a less restricted investment mandate is positive for the fund moving forwards. The fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.

Past performance is not a guide to future returns. Source: Lipper IM

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