Latest data from Citywire Discovery has revealed that net assets inflows for M&G Investments’ M&G Optimal Income Fund reached $4.80 billion from November 2016 to October 2017.
Managed by Richard Woolnough, the fund came in fourth in Citywire’s fund manager ratings.
According to Ben Cherrington, Asia Pacific, head of intermediary channels, in the past 18 months, the vast majority of fund flows through private bank clients have been into fixed income funds in general, specifically those with flexible mandate.
‘The strategy is an unconstrained, flexible, go anywhere solution, designed to identify opportunities across the duration and credit spectrum.
‘Its steady income stream and heavily resourced team have also resulted in keen interest from many major private banks in the region,’ he told Citywire Asia.
Since the start of 2017, Woolnough has found investment grade credit more attractive than high yield, and has reduced the fund’s high yield exposure from around 35% to below 14%, which is the lowest ever level.
He said M&G remains positive on credit and believes there is room for further spread compression.
‘The portfolio is short duration as we expect the trajectory of bond yields over the medium term to be upwards.’
‘One of the biggest uncertainties to markets so far remains what will happen for Brexit and what compromises will be made, which has a big influence in terms of whether it is a stable or difficult political world,’ he added.
Moving into 2018, Woolnough said M&G is positive on corporate bonds, especially issues from US companies.
‘The global economy is in a reasonable health, investors are in a period of synchronised global growth and company default rates remain low.
‘However, we remain cautious on government bonds, believing that they are already expensive. Therefore, there is little more upside but considerable downside as further interest rate rises in the US are likely.’