Following a conference call update from Woolnough, Mick Gilligan, head of funds research at Killik & Co, said: "We concur with much of Woolnough’s economic outlook. Yield spreads of corporate credit over gilts are attractive. We acknowledge that the various financial crises being experienced around the world are a long way from being resolved.
However we believe a deep and long-standing recessionary period will be avoided and that yields available on much of the investment grade corporate credit market more than outweigh the risks of anything aside from this scenario. We continue to rate this manager’s ability to make consistently good macro and credit calls."
Year-to-date the Strategic Corporate Bond Fund has produced a 7.6% return, broadly in line with the returns of the average sterling corporate bond fund, according to the IMA sector data, and outperforming the returns generated from the gilt market (3.4%).
In M&G’s intention to slow flows into the fund, Gilligan said: "The company’s two primary corporate bond funds have grown rapidly, to over £11bn of assets under management. The team acknowledge that it has become harder to implement investment views and believe it is in the interests of existing investors to control the growth of the funds.
"While there has been no sign of reduced performance or of the managers failing to achieve their investment objective, we endorse the decision to look into these measures and believe they should benefit long-term performance."
