The M&G North American Value fund, which launches with £20m in assets on 1 July with Richard Brody as manager, will resemble the value component of its manager's Prudential North American offering.
Brody, known for his deep value style, said the Prudential fund is now overweight consumer discretionary stocks, which includes retail and autos, and financials, while its biggest underweights are in technology and healthcare.
Classifying the Prudential fund, which has a 60-40 split between value and growth names, as core value, Brody said the M&G-branded vehicle will have a pure value focus.
He said the fund, which he is running with a team made up of Sam Yee, Alford Zick and Jeff Moran, will be made up of 50 to 55 names picked from a universe of firms whose market capitalisation is greater than £1.5bn. "Although our universe has over 1,000 stocks, it has the same characteristics as the S&P 500 and most of the names will be in that index," he said.
When picking stocks, Brody said the team will be looking for firms trading on substantial discounts to the S&P 500. "We want to try to understand why the market has put discounts on those stocks and I would not be interested in a company that is expensive to the market even if it is cheap relative to its own history," he said.
Jonathan Willcocks, head of discretionary sales at M&G, said it makes sense to launch a pure value fund when most managers are turning to growth because over the long-term value tends to outperform. Minimum investment in the fund is a £500 lump sum or £10 for regular savings.
Three years at Wells Fargo
Effective from 9 December 2019
One firm with permission suspensions left
Continuing the Architas education series for clients.
Needs to apply for authorisation