M&G Prudent Allocation Fund Fund Questionnaire A flexible asset allocation process to manage risk through a diversified portfolio that can invest in a variety of assets, including equities, government bonds and corporate bonds, across all major investable markets. The potential to deliver returns between 3% and 6% pa 1 , while managing volatility between 3% and 7% pa over the medium term 2 , with positive returns over rolling three years, although this is subject to change. There is no guarantee that the Fund will achieve a positive return over this, or any other, period and investors may not recoup the original amount they invested. A robust and repeatable approach – combining valuation analysis and behavioural finance – used by M&G’s Multi Asset team for over 15 years. 1 The potential return is quoted net of charges on a total return basis (combination of income and capital growth) and calculated over a three- to five-year period. 2 The potential volatility figures are calculated on a monthly basis over the medium term.
24
Embed
M&G Prudent Allocation Fund - M&G Investments · The M&G Prudent Allocation Fund seeks to generate returns and manage volatility through the flexible allocation of capital between
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
M&G Prudent Allocation Fund Fund
Questionnaire
A flexible asset allocation process to manage risk through a diversified portfolio
that can invest in a variety of assets, including equities, government bonds and
corporate bonds, across all major investable markets.
The potential to deliver returns between 3% and 6% pa1, while managing volatility
between 3% and 7% pa over the medium term2, with positive returns over rolling
three years, although this is subject to change. There is no guarantee that the
Fund will achieve a positive return over this, or any other, period and investors
may not recoup the original amount they invested.
A robust and repeatable approach – combining valuation analysis and
behavioural finance – used by M&G’s Multi Asset team for over 15 years.
1 The potential return is quoted net of charges on a total return basis (combination of income and capital growth)
and calculated over a three- to five-year period. 2 The potential volatility figures are calculated on a monthly basis
over the medium term.
Contents
Fund management team
Investment objective and strategy
Investment process
Portfolio construction
Risk management
Key fund facts
Additional information
Company details
Dealing
Risk management
Compliance
Other
Fund management team
The management team
The managers of the M&G Prudent Allocation Fund are Juan Nevado and Craig Moran. They are members of M&G’s
Multi Asset team, headed by Dave Fishwick. The managers have been in charge of the fund since launch in April 2015.
Team structure and responsibilities
The M&G Multi Asset team
Juan Nevado and Craig Moran are both longstanding members of the M&G Multi Asset team. The team comprises a
close-knit group of experienced fund managers, all trained economists with average investment experience of over
15 years. The core members of the team have been applying their unique investment philosophy and process for
over a decade, first managing multi-asset mandates for the Prudential Life Fund and then using the approach for the
M&G Multi Asset funds. A great deal of research is conducted within the team, meaning that although Juan and
Craig are ultimately responsible for all investment decisions for the M&G Prudent Allocation Fund, they are
constantly sharing and testing ideas with the other multi-asset fund managers, fund managers’ assistants and
investment specialists.
Co-Fund Manager: Craig Moran
Craig Moran was appointed deputy fund manager of the M&G Episode
Allocation Fund and the M&G Dynamic Allocation Fund in 2011. In April
2015 he was appointed co-manager of the M&G Prudent Allocation
Fund on launch. Craig joined M&G in 2005 as a performance and risk
analyst and was later promoted to a fund managers' assistant to the
Multi Asset team. In 2010, he became the team's investment analyst.
Craig holds a bachelor of business degree from Queensland University
of Technology and a masters in applied finance and investments from
the Financial Services Institute of Australasia. He is a CFA
charterholder.
Co-Fund Manager: Juan Nevado
Juan Nevado joined PPM (now M&G) in 1988 and has been working as
part of the Multi Asset team led by Dave Fishwick since 1999. In
January 2011, Juan was appointed co-manager of the M&G Episode
Allocation Fund and the M&G Dynamic Allocation Fund. In November
2013 and April 2015, he was also appointed deputy manager of the
M&G Income Allocation Fund and co-manager of the M&G Prudential
Allocation Fund respectively upon their launches. Prior to joining M&G,
Juan worked as a bond economist at the Bank of Montreal, and before
that, as an economist for the Commodities Research Unit, a private
business consultancy specialising in macro/micro research on
commodities markets. Juan has a BSc in economics from the LSE and
an MA in economics from Warwick University.
Multi Asset: experienced team with a rigorous valuation framework
Source: M&G as at 31 December 2016. Please note that not all funds are registered in all jurisdictions.
Common philosophy
The M&G Multi Asset team’s principles are based on:
A disciplined valuation framework which exploits emotional bias in the pricing of risk
Repeatable process applicable to the most liquid asset classes
Behavioural analysis to identify cause of valuation misalignment
Asset allocation as the primary driver of performance
All of M&G’s multi-asset strategies are managed within a single global investment framework under the direction of
Dave Fishwick. Underpinning this framework is the belief that the best approach to managing a portfolio lies in
flexibly allocating capital between global asset classes in response to changes in asset valuations, and
understanding the behavioural and economic drivers of those valuations.
Each individual manager or co-management team is responsible for deciding how the team’s asset allocation
decisions are employed within each fund portfolio, taking account of the fund's specific investment objectives and its
risk/reward profile. Portfolio positions are not expected to contradict the team’s view on markets and asset pricing.
Investment objective and strategy
Potential to deliver returns between 3% and 6% pa1, with volatility between 3% and 7%
pa over the medium term2, and positive returns over rolling three years, although this
is subject to change
A flexible asset allocation process that seeks to manage risk by building a diversified
portfolio
A unique investment strategy that combines valuation analysis and behavioural
finance
Investment objective
The fund aims to deliver positive total returns in any three-year period from a flexibly managed portfolio of global
assets.
There is no guarantee that the fund will achieve a positive return over this, or any other, period and investors may
not recoup the original amount they invested.
Investment strategy
The managers believe that no one has the edge in attempting to predict market movements, therefore they avoid
forecasting and instead focus on what current asset valuations are signalling about the attractiveness of different
assets, and why.
The M&G Prudent Allocation Fund seeks to generate returns and manage volatility through the flexible allocation of
capital between asset classes, guided by a robust valuation framework. In particular, the managers seek to respond
to occasions where asset prices move away from a reasonable sense of ‘fair’ value due to investors overreacting to
events and allowing their emotions to cloud rational judgment. They believe such occasions create opportunities
because short-term emotional responses should be less important than underlying fundamentals over the medium
and long term.
The M&G Prudent Allocation Fund’s approach seeks to take advantage of these emotionally driven misalignments,
establishing asset positions that stand to benefit as prices gravitate back towards their longer term normalised
valuation.
An in-depth assessment of long-term valuation signals is an integral part of the fund’s investment process, in order to
establish a sense of fair value. However, the strategy does not rely on a purely quantitative approach. These models
can fall into their own traps, not only with regards to the technical difficulties in their creation, but especially because
of their failure to adapt to changes in the economic environment. The managers’ ability to examine the economic
environment and make judgements as to the validity of valuation signals constitute a significant aspect of the fund’s
investment process.
1 The potential return is quoted net of charges on a total return basis (combination of income and capital growth)
and calculated over a three- to five-year period. 2 The potential volatility figures are calculated on a monthly basis
over the medium term.
Investment process
A disciplined valuation framework prevents the managers falling victim to behavioural
biases
The ability to understand the behavioural nature of the mispricing of assets is key
Portfolio construction is essential to achieve the fund’s objectives
The process of idea generation
1. Strategic assessment: valuation stage
The starting point of the investment process is an objective examination of a wide-ranging investment universe,
including equities, fixed interest, and other assets across developed and emerging markets via the ‘valuation
framework’.
Valuation is key. The managers assess what they would consider to be fair value for a wide range of assets around
the world in light of historical expected returns, economic theories and investors’ preferences for each asset class.
This is called ‘neutrality’. They then compare this neutrality with the real yield of these assets to create a robust
valuation framework (see chart below). The objectivity and discipline of this analysis helps to prevent Juan and Craig
themselves from falling victim to the very emotional biases they look to exploit.
Sample of assets – real yields against an assessment of neutrality
Source: M&G. Please note this chart is for illustrative purposes only and does not reflect current market data. Real yields calculated as nominal
yield adjusted for expected inflation for fixed income securities, and as one-year forward earnings based on consensus earnings deflated by one-
year inflation expectations over current price for equities. This chart represents just the starting point for the team’s investment process;
behavioural finance insights are crucial to its interpretation. M&G does not have house views.
Where an asset’s real yield is not in line with neutrality, the managers would consider that the current valuation is
signalling either that the asset is ‘cheap’ (if it is offering a real yield higher than neutrality), or ‘expensive’ (if it is
offering a real yield lower than neutrality). This chart gives the fund managers a good starting point to look for
potential opportunities across a wide spectrum and to focus their analysis on the most attractive asset classes.
Valuations analysis is carried out by the fund managers; however, they also make extensive use of a wide variety of
both internal and external resources.
A great deal of research is conducted within the Multi Asset team, meaning that although the managers are
ultimately responsible for all investment decisions for the M&G Prudent Allocation Fund, they also communicate daily
with their peers on the Multi Asset team, with the team all sitting together in our London office. Research within the
team includes use of analysis produced via a dedicated multi-asset team research programme which involves a
weekly meeting where the fund managers and the other members of the team discuss the research done on specific
global investment themes. The fund managers are also assisted in portfolio construction by specialised in-house
research analysts from across M&G, including equity, fixed income and property teams. Furthermore, the managers
have frequent access to wider Prudential group resources and meet every quarter with members of various
Prudential teams from around the world to discuss research and ideas at the Global Macro Forum.
In terms of external resources, the team uses both investment banking research and independent research.
2. Tactical assessment: behavioural stage
If the valuation stage identifies that certain assets are under- or overpriced, particularly where an asset price has
moved rapidly, the managers seek to identify what is driving this. There may be a valid reason (if there has been
genuine fundamental change) for the price movement or it could be due to human behavioural factors – investors
may be reacting emotionally to events and therefore ignoring the more important normal/fundamental investment
factors. The team identifies three factors that can help to recognise a behavioural event:
Focus on a single story – when market participants draw their attention to a single specific event and disregard
other information
Inconsistent responses – when the market behaves differently from the manner suggested by economic
developments
Rapid price movement – of any asset class either up or downwards, suggesting an ill-considered response
Over the medium to long term, the managers would expect such mispricing to correct. Therefore these behaviourally
driven episodes may create opportunities for investment.
3. Portfolio construction
If the managers establish that price movements are inconsistent with the true value of the assets, they may decide to
take an investment position. They will then decide whether to own the asset and in what proportion, in order to best
meet the fund’s return and risk aspirations, within the constraints specific to the fund.
Portfolio construction
Asset allocation and selection are the primary drivers of performance
Position sizes considered in context of total portfolio volatility
Portfolio construction is not a static process; volatility and correlation patterns are
constantly changing
Internal limits are subject to change
Portfolio construction
The main drivers of returns and volatility of the fund are the allocation to and selection of the different asset classes.
As described, the managers use a combined strategic valuation and tactical behavioural approach to identify assets
which they believe to be mispriced. The managers feel these types of opportunities are most easily observed at the
asset class, geographic or sector level, but individual security selection has little relevance. As such, they take a top-
down approach to asset allocation across a wide-ranging investment universe. Timing is vital as they look to be
invested in the right assets, at the right time. In order to allow the fund managers to take advantage of market
opportunities, the fund can express relative value views by using short positions (although it must maintain net
positive exposure to each asset class) and can use limited leverage.
Fixed income exposure
The fund managers’ internal limit for investing in fixed income securities (including cash) is between 45% and 100%
of the fund. Neutrality, or an indication of exposure should fixed income markets be at fair value, is set at 70%.
The fund can use duration hedging strategies and can also go negative duration to a maximum of -3 years fixed
income duration.
Government debt instruments are selected according to the fund managers’ macro views. The investment decision is
focused on the desired position on the yield curve in the context both of the overall portfolio and the prevailing
macroeconomic backdrop. As with other areas of the portfolio, holdings are globally diversified.
When assessing credit, analysis of valuation and fundamentals is conducted at the ‘index’ level taking into
consideration credit ratings, duration, geographical and (less frequently) sector characteristics. Starting from a macro
analysis of market opportunities, the fund managers identify interesting exposures within various corporate credit
regions and sectors. With all positions, the fund managers seek to implement the asset class exposure in the
cheapest, most efficient and liquid way, primarily at the index level. Their investment decisions are taken in the
context of the overall portfolio.
The fund managers have access to the breadth of M&G resources and capabilities in fixed income, and regularly
consult with the analysts and fund managers within the Retail Fixed Interest team.
Equity exposure
The fund managers’ internal limit for equity exposure is between 0% and 35% of the fund. Neutrality, or an indication
of exposure should equity markets be at fair value, is set at 20%. Relative value positions are allowed within the
equity exposure; however, we believe that those are more likely to occur when we observe high level of dispersion
within equity markets.
As the opportunities the managers look to exploit are most easily identifiable at the broad geographic level, most of
the equity exposure is achieved via index futures. This also affords the fund greater liquidity and flexibility than
buying and selling individual physical stocks. However, the managers are also able to exercise a high degree of
selectivity by implementing exposures to particular sectors or themes within regional markets, where they observe
particularly compelling opportunities. In these cases, they will construct baskets of individual stocks from within a
certain sector. In addition to using their own macro views, valuation framework and subjectivity to select equity
exposures, the managers also have access to M&G resources and capabilities in equities, including the analysts and
fund managers with the Equities team.
Alternatives exposure
The fund managers’ internal limit for exposure to alternative assets is between 0% and 20% of the fund. Neutrality is
set at 10%. Alternatives assets would include REITs exposure, convertible bonds, infrastructure etc. These positions
should support the fund in achieving diversification.
Currency exposure
Although currency positioning can be an additional driver of returns, the fund managers would not expect this to be
the main driver of performance over the medium term. Also, as the fund is managed in euros for European investors
the fund managers will aim to achieve the returns in euros. Given the low appetite for risk in this fund, they feel the
minimum investment in euros should be 60%.
Collectives
The fund managers may also hold up to 10% in collectives at any time. They will only invest in other M&G funds to
ensure cost efficiency and transparency, owing to their close relationship with colleagues across M&G’s business.
NB, all the above are internal limits and are subject to change.
Risk management
Understanding correlation patterns is key to portfolio diversification
Asset allocation and selection aims to take the right level of risk
Independent team of risk analysts and monitoring professionals support the fund
manager
Correlations and risk management
The M&G Multi Asset team believes that risk is best considered as the probability of losing money over a significant
period of time. Volatility, on the other hand, measures how much the price of an asset may move in either direction
over time.
While maintaining a diversified portfolio to try and minimise volatility is a sensible approach, it is important to
recognise that statically holding a variety of asset classes based on the assumption that they will each have a
different impact on portfolio risk by consistently behaving in a particular way, may not provide effective diversification.
It is important to understand and challenge the correlation patterns among different asset classes and not simply rely
on the historical correlations drawn from past performance. In order to construct a truly diversified portfolio, it is
paramount to maintain an objective view of asset valuations and also to take into account the effect that human
behaviour and investor psychology can have on asset pricing and their relative movements.
Taking some level of risk can be helpful, even essential, in meeting investment goals, as long as sufficient
compensation is being paid for taking that risk. Through a diversified, flexible portfolio, the fund managers aim to add
value by taking the right level of risk at the right price.
Monitoring of investment risk
Risk management for a fund is the responsibility of the fund managers. They are supported in this by an independent
team of risk analysts and monitoring professionals. The Risk team is independent of the Investment Management
team and provides investment risk analysis and monitoring across a broad spectrum of M&G fund management
activities including fixed interest, multi-asset and structured fund mandates and investment vehicles. Since 2001 the
Risk team has undertaken in-depth risk analysis on client funds that use derivative-based strategies. The team runs
risk models that provide regular – daily and monthly – risk monitoring and analysis reports in order to determine
whether the funds remain within their specified risk parameters.
Risk analysis
A team of risk analysts undertakes quantitative modelling and analysis, providing support and challenge to the
investment management process. The funds are reviewed by the Risk Analysis team on a monthly basis, with a
focus on their sensitivity to core market risk factors, sector and issuer/country concentration. The analysts pay
particular attention to any derivative activity and any implied leverage or shorting. The team has reporting lines
independent of the front office and report into the Group Risk Director.
Risk monitoring
The Risk Monitoring team is responsible for monitoring against risk limits, as required for those funds that have
adopted full wider powers under UCITS regulations. The Risk Monitoring team reviews on a daily basis the funds’
VaR results and compares them with the prescribed limits. VaR limits for the funds have been established in line with
the specific fund mandate; compliance/non-compliance with prescribed limits is reported to the fund managers and
M&G’s Compliance Monitoring unit. For the M&G Prudent Allocation Fund, the lower VaR limit is 0% and upper limit
is 8%, both on a 99% one-month basis.
Risk management process
The risk management process has several key objectives such as:
To monitor each fund’s overall risk position against specified risk limits established in line with its objectives and
investment policy
To provide effective risk analysis on portfolios including;
o provision of portfolio risk analysis identifying key risk factor positioning
o provision of risk sensitivities including VaR, stress test and scenario analysis
To provide oversight for senior management that funds are being managed in line with mandates
o highlighting key risks
o ensuring that adequate debate on risks takes place between the fund managers and senior
management team
Key fund facts
Fund name M&G Prudent Allocation Fund
Fund legal structure OEIC, incorporated in the UK
Inception date 23 April 2015
Investment policy/strategy The fund may invest in a range of fixed income assets, equities, collective investment
schemes, other transferable securities, cash and near cash, deposits, warrants and money
market instruments. Derivatives may also be used, for both hedging and investment
purposes.
Asset allocation is central to the fund’s investment philosophy and is based on the fund
manager’s macroeconomic outlook, asset class valuations and active risk management in
portfolio construction. The fund seeks to manage risk by investing globally in multiple asset
classes. As such the portfolio may be diversified across asset classes, sectors, currencies
and countries although, at the fund manager’s discretion, there may be some periods
where the portfolio will have a higher than usual concentration of asset or market exposure.
The fund will not have the majority of its assets in equities.
Equity trades are executed on behalf of all fund managers by a central dealing desk, consisting of five dealers.
The fund manager enters trade instructions on M&G’s order management system. The instruction is checked for
validity against any pre-trade compliance rules (including a restricted dealing list). If the trade is deemed acceptable
then it will be sent to the dealing team.
Deals are conducted in such a way as to maintain equality of treatment between all client funds. All funds for which a
particular deal is being conducted will have their orders completely filled or will receive the same proportion of the
stock available if it is not possible to satisfy the overall demand for the stock immediately. This is particularly
important when a transaction is completed over a period of time and involves a number of differently priced deals. In
these circumstances, stock will be allocated at the same average price to all client funds.
Once the broker has confirmed the deal with the dealer the trade is sent electronically from the order management
system to M&G’s back office.
The Quasar accounting system is connected to the trading system (OMS) by a real time interface. Trades are fed
straight through to the accounting system as they are dealt and confirmed. Settlement of trades is also carried out
using the Quasar system. All accounting records are maintained on Quasar in real time and the system supports
production of daily asset valuations and unit prices as well as periodic accounting statements.
M&G’s dealing team may only deal with approved brokers (where both the risk and legal departments have approved
the broker’s terms of business and deemed them to be creditworthy). M&G does not use prime brokers.
Fixed income dealing
M&G’s long-standing presence within fixed income markets has helped to establish value-adding relationships and
forge a reputation in conduct of putting our clients’ interests first. The Fixed Income business has a central dealing
team of five FCA approved dealers who coordinate trades across M&G’s fund management teams to minimise
transaction costs and ensure all clients are treated fairly. The dealers have a dedicated support team who liaise with
M&G front and back office functions and externally with market counterparties to ensure all issues within the trade
lifecycle are resolved in an efficient manner. The team is responsible for transacting a wide array of instruments
including but not limited to, government bonds, investment grade and high yield corporates, ABS, emerging market
debt as well as exchange-traded and OTC derivatives. Trade instruction and execution is via the front office order
management system which includes an integrated compliance module to ensure instructions are within IA
(Investment Association) restrictions. Counterparty credit limits are also in place and monitored by the dealers on an
intra-day basis.
The dealers use a benchmark of seeking three quotes per trade. If the dealer does not deem it appropriate to
approach three counterparties due to the characteristics of an order, a rationale will be provided; responses are
reviewed by the head of the desk as well as (in due course) Compliance and Internal Audit.
Best execution
M&G will take all reasonable steps to obtain, when executing orders, the best possible result for our clients, taking
into account the following execution factors: price, cost, speed, assurance of execution/settlement, size, nature or
any other consideration relevant to the execution of the order. In most cases, price (and size) will be the main
factor(s) determining whether or not we will execute an order.
The dealing desk executes orders with a variety of counterparties who are each under obligation to provide us with
best execution too. The dealers will decide on the counterparty and/or the venue according to the requirements of
each and every order.
We take all reasonable steps to ensure that our order execution policy is properly applied. Consequently, our dealing
processes are overseen by senior management who evaluate, on a periodic basis, the range of all the execution
channels used to determine whether the best result has been achieved on a consistent basis or whether changes to
our execution arrangements are needed. This oversight is monitored by our Compliance department. In addition, our
order execution policy is reviewed annually.
Risk management
Operational risk
The board of MGSL is responsible for ensuring it has robust risk governance arrangements, which include a clear
organisational structure with well defined, transparent and consistent lines of responsibility. The board delegates
responsibility for oversight of the investment management and operational activities carried out for the funds to two
senior committees, namely the Retail Investment Committee (RIC) and the Retail Investment Operations Committee
(RIOC). RIC maintains oversight of fund investment risks and RIOC maintains oversight of fund operational risks.
The MGSL Board includes the following key representatives:
MGSL Chief Executive Officer (Chair)
MGSL Legal Director
MGSL Compliance Director
M&G Chief Operating Officer
M&G Risk Director
MAGIM Business Management Director
MGSL delegates investment management responsibilities to MAGIM.
The MAGIM Board is responsible for overall risk control and receives quarterly reports from all business units. The
MAGIM Board delegates to the MAGIM Risk Committee responsibility for ensuring that all MAGIM business units
establish and maintain appropriate systems for monitoring and controlling investment exposures. These business units
are supported by several centralised functions: Compliance, Risk, Operations, Human Resources, Finance and Audit.
On an annual basis each business unit presents its investment risk controls to the MAGIM Risk Committee for review
and challenge, with specific reference to changes in process and control over the previous 12 months. Additionally,
the committee, which meets on a monthly basis, is ultimately responsible for the fair value and new markets process.
Fund level risk
At the individual fund level, risk management is the responsibility of the relevant fund management team, supported
by risk teams applicable to each asset class.
M&G has two primary independent risk teams: the Portfolio Construction & Risk team (PCR) and the Risk Analysis
team. The PCR team is devoted to monitoring equity strategies, whilst the Risk Analysis team focuses on fixed
income, convertibles and multi-asset funds. The risk teams are independent of fund management and have different
reporting lines. Their roles are consultative and they therefore do not impose decisions on the fund managers.
Each quarter, risk results from all funds are reviewed by M&G’s Investment Oversight Committee, which ensures
each fund is managed in line with its investment objectives. The committee also provides senior management insight
into how each fund is being managed in terms of the drivers of investment risk and performance, as well as acting in
a supportive role to help fund managers in delivering performance. The oversight committee considers relevant risk
metrics, fund positioning, performance attribution, trading activity and liquidity analysis, with any issues raised
discussed with the relevant fund managers as required. They will then decide whether or not they are comfortable
with the analysis and subsequent fund manager comments and hence, whether any further investigation and
possible action are required.
Business continuity
Full disaster recovery procedures are in place at M&G and disaster recovery tests are carried out annually. The
disaster recovery site is situated at Chelmsford with a separate site designated for file storage and systems back-up.
We define a disaster recovery event as a situation that prevents access to our normal offices and requires the
relocation of staff and/or systems. We define business continuity disruption as an event that causes a temporary
interruption to our business processes. This disruption can be of varying scale and duration.
The objectives of the M&G disaster recovery plans are to:
Establish an effective organisational structure to manage a disaster affecting any M&G offices
Ensure the safety and welfare of M&G staff affected by an incident
Ensure the rapid re-establishment of critical assets and business functions
Ensure effective relations with the media and clients
Organise internal communications with affected employees
A nominated member of the M&G board has specific responsibility for the strategic development of company-wide
business continuity and disaster recovery programmes. Day-to-day management of disaster recovery planning in
M&G is the responsibility of the Information & Risk Management department. Each senior manager in M&G has
responsibility for business continuity planning for their area or department.
The FCA requires a specific level of business continuity and disaster recovery planning.
To date it has not been necessary to activate the off-site Disaster Recovery site in Chelmsford. The plan is tested at
least annually.
Compliance
Compliance team
The Chief Compliance Officer (CCO) leads, directs and manages the activity of the Compliance Department and
retains overall accountability for Compliance services delivered. The CCO ensures that the Compliance Department
actively supports the Business in delivering M&G’s corporate strategy in a manner that is compliant with applicable
laws, regulations, business standards, rules of conduct and established industry practices. The CCO reports to the
M&G Chief Executive. The M&G Compliance Department comprises the following teams:
Compliance Strategy and Regulatory Development
Regulatory Liaison
Compliance Advisory
Central Compliance
Financial Crime Compliance
The Compliance Department, on a day-to-day basis, is responsible for overseeing the operation of the compliance
framework, for undertaking key compliance activities and for providing assurance on whether Compliance policies
and procedures are being complied with. The Compliance Department provides:
Independent oversight over the the M&G regulated entities and third party outsourced operations through an
agreed risk based Compliance Plan and Compliance Monitoring Plan;
Ongoing advice, support and training to the business on Compliance matters and regulatory obligations and
risks;
Policies and procedures to support the business in meeting their obligations and managing their risks;
Regular reporting to relevant boards and committees on the regulatory risk profile of the firm and results of
Compliance oversight activities;
Reporting to the FCA in line with FCA requirements; and
Systems and controls to prevent the exposure of M&G and its customers to the threat of financial crime.
Other
Custodian
The custodian of M&G Retail funds is State Street (appointed by NatWest/RBS, the depositary).
The depositary is responsible for the safekeeping of fund assets and has appointed State Street to act as custodian.
However, the depositary remains responsible for the actions of the custodian and monitors its effectiveness and
standing on an ongoing basis.
Non-cash assets of the M&G funds are held in separate client accounts with the custodian, in the name of the
depositary on behalf of each M&G fund. These assets are ring-fenced from the assets of both the custodian and
depositary and are therefore protected from claims of the creditors of those entities.
Counterparties
Custodian – State Street
Depositary – National Westminster Bank
Registrar – International Financial Data Services (UK)
Auditor – Ernst & Young
In addition, fund accounting, taxation and pricing operations are performed by State Street. Dealing is performed by
an internal team – we do not use prime brokers – and, as a major institutional investor, we have access to a large
number of brokers.
The value of investments will fluctuate, which will cause fund prices to fall as well as rise and investors may not get back the original amount invested. For Investment
Professionals and Institutional Investors only. Not for onward distribution. No other persons should rely on any information contained within. For
Switzerland: Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to Qualified Investors according
to the Swiss Collective Investment Schemes Act, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss
supervisory authority ("Qualified Investors"). Supplied for the use by the initial recipient (provided it is a Qualified Investor) only. In Spain the M&G
Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G Investment Funds (1) reg. no
390, M&G Investment Funds (2) reg. no 601, M&G Investment Funds (3) reg. no 391, M&G Investment Funds (5) reg. no 972, M&G Investment Funds (7) reg. no 541,
M&G Investment Funds (9) reg. no 930, M&G Investment Funds (12) reg. no 1415, M&G Investment Funds (14) reg. no 1243, M&G Global Dividend Fund reg. no 713,
M&G Dynamic Allocation Fund reg. no 843, M&G Global Macro Bond Fund reg. no 1056 and M&G Optimal Income Fund reg. no 522, M&G (Lux) Investment Funds 1
reg. no 1551. The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital,
incorporated in England and Wales in respect of M&G Investment Funds and in Luxembourg in respect of M&G (Lux) Investment Funds. In the Netherlands, all funds
referred to, are registered with the Dutch regulator, the AFM. This information is not an offer or solicitation of an offer for the purchase of investment shares in one of
the Funds referred to herein. Purchases of a Fund should be based on the current Prospectus. The Instrument of Incorporation, Prospectus, Key Investor Information
Document, annual or interim Investment Report and Financial Statements, are available free of charge, in paper form, from the ACD: M&G Securities Limited,
Laurence Pountney Hill, London, EC4R 0HH, GB; or one of the following - M&G International Investments Limited, German branch, mainBuilding, Taunusanlage 19,
60325 Frankfurt am Main; the Austrian paying agent: Société Générale Vienna Branch, Zweigniederlassung Wien Prinz Eugen-Strasse, 8-10/5/Top 11 A-1040 Wien,
Austria; the Luxembourg paying agent Société Générale Bank & Trust SA, Centre operational 28-32, place de la Gare L-1616 Luxembourg; the Danish paying agent:
Nordea Bank Danmark A/S Issuer Services, Securities Services, Hermes Hus, Helgeshøj Allé 33, Postbox 850, DK-0900, Copenhagen C, Denmark; Allfunds Bank,
Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, Spain; M&G International Investments Limited, the French branch; from
the French centralising agent of the Fund: RBC Investors Services Bank France; or from the Swedish paying agent: Nordea Bank AB (publ), Smålandsgatan 17, 105
71 Stockholm, Sweden. For Switzerland, please refer to M&G International Investments Switzerland AG, Talstrasse 66, 8001 Zurich or Société Générale, Paris, Zurich
Branch, Talacker 50, P.O. Box 5070, 8021 Zurich, which acts as the Swiss representative of the Schemes (the "Swiss Representative") and acts as their Swiss paying
agent. For Italy, they can also be obtained on the website: www.mandgitalia.it. For Germany and Austria, copies of the Instrument of incorporation, annual or interim
Investment Report, Financial Statements and Prospectus are available in English and the Prospectus and Key Investor Information Documents/s are available in
German. Before subscribing investors should read the Prospectus, which includes investment risks relating to these funds. The information contained herein is
not a substitute for independent advice. In Switzerland, this financial promotion is issued by M&G International Investments Switzerland AG, authorised and regulated
by the Swiss Federal Financial Market Supervisory Authority. Elsewhere, it is issued by M&G International Investments Ltd. Registered Office: Laurence Pountney Hill,
London EC4R 0HH, authorised and regulated by the Financial Conduct Authority in the UK. Registered in England No. 4134655 and has a branch located in France, 6
rue Lamennais 34, Paris 75008, registered on the Trade Register of Paris, No. 499 832 400 and a branch in Spain, with corporate domicile at Plaza de Colón 2, Torre
II, Planta 14, 28046, Madrid, registered with the Commercial Registry of Madrid under Volume 32.573, sheet 30, page M-586297, inscription 1, CIF W8264591B and
registered with the CNMV under the number 79. The Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários, the “CMVM”) has
received a passporting notification under Directive 2009/65/EC of the European Parliament and of the Council and the Commission Regulation (EU) 584/2010 enabling
the fund to be distributed to the public in Portugal. M&G International Limited is duly passported into Portugal to provide certain investment services in such jurisdiction
on a cross-border basis and is registered for such purposes with the CMVM and is therefore authorised to conduct the marketing (comercialização) of funds in