Interactive Investor

Coronavirus ii Super 60 update: M&G bond funds

interactive investor's analysts bring you an urgent update on this ii Super 60 rated fund.

30th March 2020 16:01

Teodor Dilov from interactive investor

interactive investor's analysts bring you an urgent update on this ii Super 60 rated fund.

The coronavirus outbreak and subsequent pandemic have had a significant impact on the global economy and financial markets. Many share and fund prices have fallen sharply in a very short space of time, as has the cost of oil and other commodities. Volatility has reached levels not seen since the peak of the financial crisis in 2008, and many assets remain prone to sharp movements both up and down.

Given these unprecedented circumstances, with citizens in many of the world’s largest cities confined to their homes, we are collecting updates from managers of funds on the ii Super 60 list of high-conviction active and passive investments.

Here is the latest from the M&G Bonds Team on 24 March.

M&G Emerging Markets Bond Fund

“The coronavirus outbreak weighed heavily on investor sentiment during February 2020, and emerging market bonds were among the assets that fell out of favour with investors during the month.

“The fund remained globally diversified across emerging market hard currency and local currency government and corporate bonds. Both bonds issued in local currency and hard currency declined in value, although the appreciation of the US dollar versus the pound offset some negative performance during the month.

“We increased our exposure to US dollar bonds in February, reducing our allocation to local currencies by selling bonds denominated in the Philippine peso and Indonesian rupiah, as well as the Chilean peso. We also sold corporate bonds issued by Teva Pharmaceuticals (NYSE:TEVA) and chemicals group Mexichem after they performed well.”

M&G Global Macro Bond Fund 

“Core government bond yields continued to decline in February 2020, as global investors’ appetite for risk fell on fears about the coronavirus outbreak. (Yields refer to the interest received from a loan issued under the form of a fixed income security, also known as a bond. Yields are usually expressed annually as a percentage of the investment’s cost, its current market value or its face value; when bond yields rise, bond prices fall).

“The fund remained globally diversified across government and corporate bonds, as well as currencies. Our core government bond holdings, as well as our exposure to the US dollar and the Japanese yen, contributed to positive returns in February.

“We maintained our cautious approach amid the global risk-off environment. We lowered our exposure to certain emerging market currencies, including the Indonesian rupiah and Malaysian ringgit, during the month and increased our exposure to US dollars.”

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