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M&G (Lux) European Strategic Value FundEuro Class A – Accumulation sharesis a sub-fund of M&G (Lux) Investment Funds 1, an umbrella fund set up as a société d'investissement à capital variable (SICAV)under Luxembourg law. This fund is managed by M&G Luxembourg S.A., a limited liability company under Luxembourg law.
Monthly Fund Review as at 31 January 2021For investment professionals only
Highlights■ The fund was ahead of the benchmark MSCI Europe Net Return Index in January, with Finnish network equipment firmNokia a leading contributor.■ European equities declined in January as a sell-off at the end of the month wiped out initial gains.■ We added several new holdings, including steelmaker ArcelorMittal, Spanish IT services firm Indra Sistemas and Frenchutility Engie. The stake in Vectura was sold.
The main risks associated with this fundFor any past performance shown, please note that past performance is not a guide to future performance.The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested. The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment. Further risk factors that apply to the fund can be found in the fund's Key Investor Information Document (KIID).
Key informationCompany Name M&G International Investments S.A.Fund manager(s) Richard HalleFund manager tenure from 01 February 2008Deputy fund manager(s) Sylvia BaxterISIN LU1670707527Launch date of fund 18 September 2018Launch of share class 20 September 2018Fund size (millions) € 1.639,66Fund type SICAVBenchmark MSCI Europe Net Return IndexSector Morningstar Europe Large-Cap Value Equity
sectorNumber of companies 80Portfolio turnover over 12 months 31,19%VaR 19,49%
‘Manager tenure’ includes the period when managing an equivalent UK-authorised OEIC. Please see ‘Importantinformation’ at the end of this document for further details.
Risk characteristicsAs at 31/01/2021 FundAlpha (%) -3,08Information ratio -0,61Sharpe Ratio -0,05Historic tracking error (%) 5,03Beta 1,14Standard deviation (%) 29,40Forecast tracking error (active risk, %) 8,13Active share (%) 82,82
Things you should knowThe fund invests mainly in company shares and is therefore likely to experiencelarger price fluctuations than funds that invest in bonds and/or cash.Performance is stated in the share class currency, which may differ from yourdomestic currency. As a result, the return may rise or fall due to currencymovements.
Fund ratingsMorningstar Analyst rating
Overall Morningstar rating QQQQSource of Morningstar ratings: Morningstar, as at 31 January 2021
The Morningstar Analyst Rating for funds is Morningstar’s forward-looking, analyst-driven ratings system that isexpressed on a five-tier scale running from Gold, Silver, Bronze, Neutral, and Negative. The Analyst Rating denotes ananalyst’s conviction in a fund’s investment merits. Analysts typically re-evaluate Analyst Ratings on an annual basis.
The Morningstar Rating, or “star rating, “is a purely quantitative, backward-looking measure of a fund’s pastperformance, measured from one to five stars. Funds are rated from 1 to 5 stars, with the best performers receiving 5stars and the worst performers receiving a single star. Star ratings are calculated at the end of every month
CommentaryGlobal equities had a mixed start to the new year in January as initial gains were wiped out by a steep sell-off at the end of the month.Stockmarkets climbed initially, as optimism that the roll-out of COVID-19 vaccines will support a global economic recovery and theprospect of a new stimulus package in the US lifted investor sentiment.However, share prices subsequently retreated amid growing concerns about new coronavirus variants and the economic impact of furtherlockdowns.In this unsettled environment, the MSCI Europe Net Return Index fell 0.7%. At the sector level, returns were mixed. Information technologycontinued to perform well, driven by robust demand for memory chips. Energy stocks also rose as oil prices were supported by producers’plans to curb supply. Materials gained as well. In contrast, financials and real estate were notable laggards.In terms of style, ‘value’ was broadly in line with the market. The fund was able to participate in the value rally in the first half of the monthand retain some of that performance in the subsequent sell-off.Against this background, the fund’s return was ahead of the benchmark index. Stock selection in information technology added value withFinnish telecom equipment firm Nokia a leading contributor. Nokia’s share price climbed on the back of multiple deals to provide 5Gequipment. The stock then surged in a rally driven by retail investors linked to the Reddit website. The fund tactically took some profit inthis rally. Swedish peer Ericsson also advanced after reporting strong sales of 5G equipment and higher margins.In materials, stainless steelmakers Aperam and Outokumpu made positive contributions too as they extended their positive momentumfrom the end of last year. Oil giant BP added value as energy stocks were buoyed by higher oil prices.We feel many of our holdings are seeing positive share price moves as the market looks through immediate COVID-related challenges andbegins to anticipate inflation in certain areas of the economy.In contrast, weakness among our financial holdings held back relative returns. Irish lender Bank of Ireland and UK banks NatWest andLloyds cost some performance as their share prices retreated after rallying in the final quarter of 2020.Our holdings in UK hotel operator Whitbread and low cost airline easyJet also detracted as their shares fell on plans to introduce toughquarantine rules.
Key changesWe identified a number of new holdings in January, including Luxembourg-based steelmaker ArcelorMittal. The company has madesignificant changes, reducing debt and making disposals, and we think it is now focusing on becoming better, not bigger. In our view,ArcelorMittal is also well placed to benefit from any post-COVID economic stimulus plans and a shift to a zero carbon world, which is likelyto be steel intensive.Indra Sistemas, a Spanish IT services and solutions company, also joined the portfolio. We think the firm is attractive valued and investorsare overlooking the potential for margin improvement and possible disposals.French utility firm Engie and UK food ingredients company Tale & Lyle also joined the portfolio.On the other hand, we sold our entire stake in UK pharmaceutical company Vectura and trimmed our positions in UK retailer Next andNokia following recent share price gains.
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Fund codes and charges
Share class ISIN Bloomberg CurrencyShare class launch
The above ongoing charge figure is an estimate of the charges because of a change to the charging structure with effect from 1st October 2020.The ongoing charge figure may vary from year to year and excludes portfolio transaction costs. Given the size of the fund, the Administration Charge which is included in the OCF has been discounted. The fund's annual report for each financial year will include details on the exact charges made. Any ongoingcharge figure with * indicates an estimate. The fund's annual report for each financial year will include details of the exact charges. Please note that not all of the share classes listed above might be available in your country.Please see the Important Information for Investors document and the relevant Key Investor Information Document for more information on the risks associated with this fund and which share classes are available for which product and which investor type.
ESG Integrated fundsFunds that integrate financially material ESG data into the risk management and decision-making process, as well as our company-wide exclusions (cluster munitions and anti-personnel mines). Some strategies may have some additional ESG exclusions.
Cluster munitions & anti personnel landmines ✔Other exclusions or restrictions ✔
Voting ✔Engagement ✔Please see glossary for further explanation of these terms.
ESG Standard GlossaryAdditional ESG specifications: In the context of M&G, theseare funds managed with an explicit ESG objective, outcomeor in accordance with specific ESG criteria, and will have anumber of minimum exclusions in place.Engagement: Interaction with company management onvarious financial and non-financial, including ESG, issues.Engagement allows investors to better understand how acompany is undertaking its operations and how it isinteracting with its stakeholders, as well as advising on andinfluencing company behaviour and disclosures whereappropriate.ESG integration: Describes the explicit and systematicinclusion of Environmental, Social and Governance factors ininvestment analysis and investment decisions. It underpinsa responsible investment approach, and allows investors to
better manage risk and generate sustainable, long-termreturns.Exclusions: The exclusion or restriction of investmentsbased on the sector in which they operate, the products orservices they provide or for other specific criteria, i.e. theyare deemed to be in breach of the United Nations GlobalCompact principles on human rights, labour theenvironment and anti-corruption.Voting: As the partial owners of a company, shareholdershave the right to vote on resolutions put forward at acompany’s annual general meeting. These resolutionsinclude the re-election of directors, executive remunerationand business strategy, among others, and may includeresolutions put forward by shareholders.