M&G (Lux) Sustainable Allocation Fund

Objective and investment policy

Objective

The fund aims to provide combined capital growth and income of 4-8% per year over any five-year period, while considering environmental, social and governance (ESG) factors.

Investment policy and strategy

Core investment: The fund invests globally (including emerging markets), typically as follows:

- 20-80% in bonds

- 20-60% in equities

- 0-20% in other assets

Assets are selected that meet the investment manager’s assessment of ESG factors and impact criteria. 10-30% of the fund is invested in companies that have a positive impact on society by addressing the world’s social and environmental challenges, based on M&G’s impact assessment methodology.

Companies deemed to be in breach of the United Nations Global Compact principles and/or involved in industries such as the production of tobacco or controversial weapons are excluded from the investment universe.

The fund typically invests directly.

It may also invest via derivatives or other funds.

At least 70% of the fund is normally invested in assets valued in euro or in currencies hedged into euro.

Derivatives: Derivatives are used for investment purposes, to reduce risk and costs, and to manage the impact of currency movements.

For more information on the types of bonds held and derivatives used, please refer to the Prospectus.

Strategy in brief: The approach to sustainable investment is through flexible asset allocation, implemented by investing in securities of companies or governments that uphold high standards of ESG behaviour. The approach combines research to work out the ‘fair’ value of assets over the long term with analysis of the economic fundamentals and market’s short-term reactions to events, to identify investment opportunities.

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 fund may take short positions through the use of derivatives which are not backed by equivalent physical assets. Short positions reflect an investment view that the price of the underlying asset is expected to fall in value. Accordingly, if this view is incorrect and the asset rises in value, the short position will cause the Fund to incur a loss.

The value of the fund will fall if the issuer of a fixed income security held is unable to pay income payments or repay its debt (known as a default). Fixed income securities that pay a higher level of income usually have a lower credit rating because of the increased risk of default. The higher the rating the less likely it is that the issuer will default, but ratings are subject to change.

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

Hedged share classes aim 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 euro.

The manager will place transactions (including derivative transactions), hold positions and place cash on deposit with a range of financial institutions. There is a risk that the financial institutions may fail to meet their obligations or become insolvent.

Other informaton

The Fund allows for the extensive use of derivatives.

Fund Team

Maria Municchi

Maria Municchi - Fund manager

Maria Municchi is manager of the M&G (Lux) Sustainable Allocation Fund since launch. She is also deputy manager of the M&G (Lux) Income Allocation Fund and M&G Episode Income Fund (UK-authorised OEIC). Before joining M&G in 2009, Maria worked at Barings and UBS Asset Management. She has an MSc in international management and finance and is a CFA charterholder.

 Team member biography
Steven Andrew

Steven Andrew - Deputy Manager

Steven Andrew joined M&G in 2005 as a member of the portfolio strategy and risk team, before moving to the multi-asset team, where he helped to formulate asset allocation strategies for M&G's multi-asset fund range. In November 2010, Steven was appointed manager of the M&G Episode Income Fund (a UK-authorised OEIC). Three years later, he became manager of the M&G Income Allocation Fund upon its launch, a fund that merged into the M&G (Lux) Income Allocation Fund in March 2018. He was appointed deputy manager of the M&G (Lux) Sustainable Allocation Fund upon launch in November 2018. Steven began his career at the Bank of England in 1987 and subsequently worked at F&C Asset Management and Merrill Lynch before joining M&G. He holds a BSc (Hons) degree in financial economics from the University of London.

 Team member biography

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For Investment Professionals only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website. Content should therefore be shared responsibly with other investment professionals. The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.