M&G (Lux) Emerging Markets Bond Fund

Objective and investment policy

Objective

The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global emerging markets bond market over any three-year period.

Investment policy and strategy

Core investment: At least 80% of the fund is invested in bonds issued by the governments, government agencies or companies of emerging market nations*,which can be denominated in any currency.

Other investment: The fund also invests in currencies, focusing mainly on emerging market currencies and major currencies such as the US dollar and euro. It also holds cash or assets that can be turned quickly into cash.

Use of derivatives: The fund typically invests directly, but may also investindirectly via derivatives. Derivatives may also be used to manage risks and reduce costs, as well as to offset the impact of currency exposures arising from the fund’s non-US dollar investments. For more information on the types of bonds held and derivatives used, please referto the Prospectus.

* Emerging market countries are defined as those includedwithin the MSCI Emerging Markets Index and/or those included in the World Bank’s definition of developing economies, as updated from time to time.

Strategy in brief: The investment manager selects investments based on an assessment of global, regional, and country-specific macroeconomic factors,followed by in-depth analysis ofindividual bond issuers.

The investment manager is assisted in the selection of individual bonds by the deputy fund manager and an in-house team of analysts. The fund is diversified by investing in a range of bonds from across the global emerging markets.

Performance comparator: The fund is actively managed.Acomposite index comprising 1/3 JPMorgan EM Government Bond Index Global Diversified, 1/3 JPMorgan EM Corporate Bond Index Broad Diversified and 1/3 JPMorgan EM Government Local currency Bond Index Global Diversified is a point of reference against which the performance of the fund may be measured. These indices represent the emerging market government bond markets denominated in hard currencies, the emerging market corporate bond markets denominated in hard currencies and the emerging market government bond markets denominated in local currencies, respectively.

Glossary terms

Bonds: Loans to governments and companies that pay interest.

Derivatives: Financial contracts whose value is derived from other assets

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).

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

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

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.

The fund may use derivatives in a limited way to gain exposure to investments exceeding the value of the fund (leverage). This may cause greater changes in the fund’s price and increase the risk of loss.

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.

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.

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.

News

Fund Team

Claudia Calich

Claudia Calich - Fund manager

Claudia Calich joined M&G in October 2013 as a specialist in emerging markets debt and was appointed fund manager of the M&G (Lux) Emerging Markets Hard Currency Bond Fund at its launch in May 2017. She has been fund manager of the M&G Emerging Markets Bond Fund since December 2013. She was also appointed fund manager of the M&G Global Government Bond Fund and deputy manager of the M&G Global Macro Bond Fund in July 2015. Claudia has over 20 years of experience in emerging markets, most recently as a senior portfolio manager at Invesco in New York, with previous positions at Oppenheimer Funds, Fuji Bank, Standard & Poor’s and Reuters. Claudia graduated with a BA honours in economics from Susquehanna University in 1989 and holds an MA in international economics from the International University of Japan in Niigata.

 Team member biography
Charles de Quinsona

Charles De Quinsonas - Deputy Manager

Charles de Quinsonas joined M&G in May 2014 as an emerging market corporate bond specialist. He became deputy fund manager of the M&G Emerging Markets Bond Fund in September 2015 and deputy fund manager of the M&G (Lux) Emerging Markets Hard Currency Bond Fund at launch in May 2017. He has been fund manager of the M&G (Lux) Emerging Markets Income Opportunities Fund since its launch. Charles has over seven years of emerging market corporate bond experience, with a deep knowledge of high yield credit. Prior to joining M&G he worked at Spread Research in Lyon and New York, where he spent four years analysing a variety of high yield and emerging markets industrial credits. Charles holds a BBA from ESSEC Business School, a MSc in Corporate Finance from iaelyon School of Management and a BA (Hons) in Business & Finance from Sheffield Hallam University.

 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

4 Star Rating

Ratings as at 31/12/2018. The Morningstar Overall Rating. Copyright © 2019 Morningstar UK Limited. All Rights Reserved. The Morningstar Analyst Rating™. © 2019 Morningstar. All Rights Reserved. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Ratings should not be taken as recommendation.

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