M&G to revamp emerging markets bond fund strategy

The M&G Emerging Markets Bond fund is set to amend its investment policy to make it more flexible.

The £20m fund, managed by bond manager Mike Riddell, will have more flexibility to invest in a greater range of countries and their debt.

A letter sent to advisers says: “We propose to change our definition of emerging markets to enable investment in a wider range of emerging market countries.”

The fund currently defines “emerging market nations” by reference to the JP Morgan Emerging Markets Bond Index, which is a global index.

A spokeswoman for M&G says: “We have been keeping this index under review for some time and now feel that the list of countries included in the index has become too narrow and is updated too infrequently.

“Moreover, the index can exclude countries which, in our view, have the characteristics of emerging or developing markets and which potentially offer excellent investment opportunities.”

With the new policy, M&G will decide which countries the firm considers to be emerging markets.

She says: “Typically we would expect such countries to be those that the International Monetary Fund or the World Bank define as emerging or developing economies.”

The fund is currently required to hold 80% in sovereign bonds issued by countries included in the JP Morgan Index.

The spokeswoman says the new strategy will allow the manager to invest the fund completely in emerging market government debt or completely in emerging market corporate bonds, if he has a strong conviction.

The changes are subject to a successful vote and are set to be implemented subsequently on April 19.