By Kira Nickerson M&G is to add to its range of global specialist funds through the reorganisation ...
By Kira Nickerson
M&G is to add to its range of global specialist funds through the reorganisation and merger of its Commodity, Gold and Australasian funds into a Global Basics fund, to be managed by Graham French.
Unitholders have been contacted about the renaming and change of objective of the £52.8m M&G Australasian fund into a global equity fund which invests in companies operating in primary and secondary industries as well as companies that service these industries.
The sole aim of the fund, which had been almost exclusively invested in the Australian stock market, is to be long term capital growth.
The Australian stock market, has traditionally displayed a stronger bias than many other countries towards companies operating in basic industries. Consequently, the fund has had a bias towards industries that produce or source raw materials, as well as industries that convert these materials into commodities and products for the consumer.
Bill Vasilieff, director of group product development at M&G, said: "This strategy has been successful, primarily as a result of the high level of expertise the investment managers have developed in the research of these sectors both domestic and globally.
"It is therefore proposed that in order to take full advantage of this expertise, the investment objective of the fund be changed to focus on investment in these same basic industries, as well as in companies that service these industries, but on a global basis.
At the same time the group plans to merge the £32.2m M&G Commodity and the £11.2m M&G Gold funds, both of which are managed by Graham French, into the Australasian fund, which is to be renamed Global Basics.
The M&G Commodity Fund and Gold Fund were established in 1976 and 1983 respectively.
Vasilieff said: "Over the long term it has been shown that although these sectors can be attractive in certain economic and market conditions, it is inappropriate for these funds to be exclusively invested in these very narrow area of the market at all times."
Over the three months to 15 November, the M&G Commodity fund has returned 4.2%, on a bid to bid basis, and is ranked nine out of 56 funds in the specialist sector.
Over three years to that date the fund has returned 11.7%, on an offer to bid basis, and is ranked 25 out of 30 funds.
M&G Gold is ranked 26 out of 30 over three years with offer to bid returns of 0.2% while M&G Australasian is ranked 24 out of 30 with offer to bid returns of 16.2%.
The average fund in the specialist sector returned 90.3% over the three years to 15 November.
Earlier this month Investment Week first reported M&G's plans to offer a range of global specialist funds.
Last year it launched Global Technology and the group is looking to launch Global Media & Communications in February. Global Technology is ranked five out of 42 funds in the specialist sector over one year to 15 November with offer to bid returns of 37.1%.
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