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We take a closer look at the M&G Corporate Bond Fund.
Who's it for? Confident investors
It is important to have exposure to bonds as part of a diversified investment portfolio. They tend to be lower risk and pay a higher income than many shares. But it is often argued that selecting the right bonds is a lot more complicated than selecting the right shares because while most companies may have only one share for you to buy, they may have many hundreds of different bonds to choose from. Each bond will have different risks which will result in different returns. As such, you need a large and dedicated team to analyse the market. And when you look at the sterling corporate bond market, one of the largest teams is that which manages the M&G Corporate Bond Fund.
What are corporate bonds?
Corporate bonds are issued by companies as a way of raising capital which is then ploughed back into the business. As a bond investor you’re effectively lending the company money which it will then pay back with interest, known as the yield. These bonds generally have a market value during their life.
Where does this fund invest?
The M&G Corporate Bond Fund invests in a part of the market called ‘investment grade’. The majority of bonds in the market are assessed by independent ratings agencies, which give each one a rating. The part of the market with better ratings is called the investment grade space. These bonds are expected to have a higher chance of being repaid, and this is where the M&G Corporate Bond Fund invests. However, even the very highest quality companies may not be able to repay their bonds. And when rating agencies change their view on the companies and deem them less profitable, the market value of the companies’ bonds may drop. As such, there is a risk of losing your capital.
The team at M&G
We believe this fund offers an attractive way to invest in the sterling corporate bond market. It is managed by Richard Woolnough, who has a strong and credible track record in this market. He is supported by a well-resourced team of investment specialists who understand the intricate and complicated workings of the bond market.
Overall returns from the best bond funds tend to be lower than those from the top funds that invest in shares, although these bond funds also tend to be less risky. There are other bond funds on the Barclays Funds List, in addition to the M&G Corporate Bond Fund, including the Fidelity Moneybuilder Income Fund and the Invesco Corporate Bond Fund. Some of these invest in different parts of the bond market and offer the potential for different yields and total returns. Find out more information about all of these funds.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified one-stop solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Whichever option you choose, you must accept that all investments can still fall in value as well as rise and you might get back less than you invest. These are our current opinions but the future, as ever, is uncertain and outcomes may differ. Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
Read the Assessment of Value report [PDF, 683KB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances. Smart Investor doesn’t offer personal financial advice. If you’re not sure about investing, seek independent advice.
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