The change is subject to shareholder approval. In the event of a successful vote, the merger is expected to take place on 25 May 2018.
Why are the funds being merged?
The way both funds are managed has become increasingly similar. They both aim to deliver income and capital growth over the long term by investing in a wide range of companies from across the globe, including higher-risk emerging markets, for example. The similarities between the two means M&G believes it makes sense to merge the funds into a single portfolio.
What can investors expect from the Global Themes fund?
Jamie Horvat, manager of the Global Themes fund, aims to identify themes that arise from changes within economies and industries. He then invests in companies he believes will benefit from these changes.
The manager is currently focused on four main themes:
- Health - the challenges and opportunities created by an aging global population
- Security - including cyber and food security
- Infrastructure - the growing need for more and better transport links, such as railways
- Environment - the increasing need for energy efficiency and pollution control
Current investments include Hutchison China MediTech. The China-based biotechnology company performed well last year after it made a breakthrough in its drug used to beat bowel cancer. Other investments include Ansell, an Australian manufacturer of protective products such as surgical gloves, which could benefit as there is an increasing need for medical treatment.
In our view, merging the funds makes sense given the increasing overlap between the two.
The Global Leaders fund has underperformed the broad global stock market for several years and our analysis suggests this is largely a result of the manager's weak stock-picking – this means he has struggled to identify and invest in companies with superior growth prospects. It is encouraging to see M&G take steps to improve the outcome for investors, though there are no guarantees of future performance.
Jamie Horvat took over management of the Global Themes fund in December 2015. Over this time it has marginally outperformed the broad global stock market, although this is over a short timeframe and is not a guide to how the fund will perform in future. He has over 16 years prior investment experience, but he mainly specialised in companies in the resources and precious metals sectors. He doesn't have any longer track record in managing a wider portfolio of global shares.
The fund does not currently feature on the Wealth 150+ list of our favourite funds. The Wealth 150+ features what we believe to be the best fund managers in the Global sector, with longer track records of investing in companies from across the globe and superior performance potential.
|Annual percentage growth|
| Feb 2013 -
| Feb 2014 -
| Feb 2015 -
| Feb 2016 -
| Feb 2017 -
|M&G Global Leaders||9.9%||7.4%||-2.8%||36.1%||12.6%|
|M&G Global Themes||-6.6%||6.5%||-4.6%||33.1%||9.1%|
Past performance is not a guide to the future. Source: Lipper IM to 28/02/2018.
Please note the M&G Global Leaders Fund takes charges from capital, which can boost the yield but erodes the potential for capital growth.
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