M&G Investments rated one fund and an online-based service as ‘must improve’ in its annual value report, but near 95% of assets under management qualified as ‘satisfactory or above’.
The M&G Recovery Fund and MyM&G, the firm’s online-based service, were both placed in the ‘must improve’ category. In 2023, the M&G Recovery fund was rated as ‘unsatisfactory’ for shortfalls in performance, which led to a review of the fund’s risk management and portfolio construction. This included a change to the fund to allow additional flexibility in stock picking, which was announced to investors in May 2024.
“We are pleased to report the M&G Recovery Fund is not rated as unsatisfactory this year. The fund manager and investment team have made changes to the portfolio construction over recent times which have led to improvements in the fund performance during the review period,” the report stated.
See also: Investors are too optimistic about the second half of the year, warn Natixis strategists
MyM&G received a ‘must improve’ rating for not fully meeting the servicing target for clients, mainly due to “difficulty of driving changes with the supplier to the platform”.
“In 2023, the Board noted issues were identified with the online service myM&G. We are disappointed that all the issues with the platform are not solved, but we will continue to monitor progress to build on the improvements made,” the report stated.
Investment performance ratings, quantified by total assets under management, showed mixed results from a year ago. While no assets fell under ‘unsatisfactory’ in 2024, compared to 3.7% in 2023, 43.7% of assets were rated as satisfactory or above for this year, less than last year’s 46.1%.
By overall fund ratings, 94.7% qualified as satisfactory or above, with 5.3% as must improve. In 2023, 96.4% were satisfactory or above, but 3.6% were marked as unsatisfactory. Overall fund ratings consider quality of services, investment performance, cost of the authorised fund manager, economies of scale, comparable market rates, comparable M&G services, and share classes.
“The market environment of interest rate rises and geopolitical and economic uncertainty during the review period has continued, but we saw notable improvements in several funds’ performance, in particular the M&G Global Convertibles Fund, the M&G Episode Growth Fund and the M&G Managed Growth Fund. Furthermore, the M&G Japan Smaller Companies Fund and M&G Optimal Income Fund continue to deliver value to investors, in relation to their performance,” the report said.
“We are however aware that some of the funds still have challenges with investment performance such as the M&G North American Value Fund and the M&G Global Dividend Fund. However, after a comprehensive review of such underperforming funds, the Board and Investment teams remain confident that the funds’ investment process has the ability to deliver on their investment objectives.”
