M&G plans to slow inflows into Woolnough's £11.4bn corporate bond range
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M&G Investments is looking at ways to stem inflows into Richard Woolnough’s £6.3bn Corporate Bond and £5.1bn Strategic Corporate Bond funds.
Both funds are big IFA favourites in the corporate bond sector. The corporate bond fund has grown by more than £2.2bn in size since May 2011, while the strategic corporate bond fund has grown by £1.7bn since May 2011, according to figures from FE Analytics.
Woolnough says the rapidly growing size of the funds had made it more difficult to implement his investment views, but had “coped” with inflows.
He says: “We think all the time about fund size at M&G and for all the funds we have at M&G we look at investing in all the different asset classes that we have.
“With respect to the investment-grade bond funds, we think it’s in the interests of existing holders of the fund to explore options to slow the inflow of new money that comes into the fund to control the growth of the fund.”
Both funds remain open to investors while the group explores ways to stem flows.
The M&G Corporate Bond and strategic corporate bond are both third quartile in the Investment Management Association Corporate Bond sector over three years, having returned 36.6 and 36.3 per cent respectively over that period. This compares to a sector average of 37.1 per cent. Both funds are top-quartile over five years to July 9, 2012.
The FSA recently sent a letter to corporate bond fund managers asking them what risk controls and monitoring they have in place to manage large scale redemptions in the face of low market liquidity.
Chelsea Financial Services managing director Darius McDermott says: “It appears a very sensible decision by M&G and Richard Woolnough. They have taken in so much money in both funds that it is not a big surprise. We think it is a good decision to protect those many existing investors who have supported the fund over the years.”
| Fund name | Size 1y ago (£bn) | Performance effect on size (£m) | Underlying approx in/out (£m) | Date of size | Fund size at 31 May 2012 (£bn) | Fund size at 9 July 2012 (£bn) |
|---|---|---|---|---|---|---|
| M&G Corporate Bond | 4.1 | 291.3 | 1608.2 | 31 May | 6.0 | 6.3 |
| M&G Strategy Corporate Bond | 3.4 | 370.4 | 1331.3 | 31 May | 5.1 | 5.1 |
Source: FE Analytics
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