Firms such as Chelsea Financial Services have already downgraded the fund to a hold due to the fact the fund was built and launched by French with a certain investment approach in mind, while Morningstar OBSR has placed the fund’s silver rating under review.
While the M&G fund is to a large extent unique in its approach, there are some other groups and funds which have a similar focus on global structural trends and invest in some of the same names.
Both Sarasin and Pictet are exponents of a thematic approach to investing; Sarasin manages a broad range of thematic funds while Hans Peter Portner’s £1.3bn Pictet Global Megatrend Selection fund is driven by what he terms “megatrends” such as demographics, emerging markets growth and polarisation. The fund has returned 86.38% since its launch in October 2008.
Jason Hollands, managing director of business development and communications at Bestinvest said there is not really another fund out there like M&G Global Basics. “It has a different strategy with a focus on basic goods, and raw materials and services. It is a bit niche. Investors may choose to go into a more commodities-type product or I suspect they will be most likely to move into a more generalist global equity fund.”
For investors who still want to access global equities on a thematic basis, the £189m JPM Global Consumer Trends Fund managed by Peter Kirkman may be one option. The fund aims to identify themes at the beginning of their evolution. When it launched in April 2008 luxury was a key driver of returns, but more recently the emphasis has shifted to other emerging themes such as health and wellness, and mobility. The fund is up 67.70% versus 49.97% for MSCI World from inception 2008 to the end of October 2013.
Gary Potter, co-head of multi-manager at F&C, said M&G Global Basics has suffered because of factors such as the global slowdown and its impact on China and the resources sector. “But if people continue to believe in that whole argument they should perhaps invest in a broadly based natural resources fund. If they are considering a move away [from the M&G fund] they’ve got to be in something that has had an equally tough time.” Obvious choices in this area are natural resources vehicles from the likes of JP Morgan Asset Management, BlackRock and Investec.
“Flipping into a global thematic fund that’s not so mean reverting is probably the wrong thing to do but people might use this as an opportunity to reconsider their overall portfolio position, and whether they were just holding the fund because it gave them access to Graham French,” Potter added.