M&G launches the M&G Global Dividend Fund

M&G has announced that the M&G Global Dividend Fund will officially launch on 18 July 2008. This is an equity income fund with a distinct investment process, which aims to select the best investments from the universe of publicly listed companies worldwide. The fund aims to provide UK investors with more investment opportunities and geographical diversity from the increasing number of companies globally which offer strong share price performance, strong dividend growth and attractive dividend yields.

The M&G Global Dividend Fund will be managed by Stuart Rhodes, and has a total return objective that combines income and capital growth to outperform the FTSE World Index as well as other global equity income funds. The new fund's active investment approach is driven by bottom-up stock selection, with a focus on return on capital as the measure of corporate performance. Dividend yield and dividend growth are used as the key measures of income in a portfolio of typically 40 to 60 stocks.

Stuart, who is also the deputy manager of the M&G American Fund, will be able to draw from the extensive capabilities and expertise of M&G's highly regarded Global Equity team, of which he has been a member since March 2005.

Stuart Rhodes, manager of the M&G Global Dividend Fund, comments: "There is a perception among investors that the UK is the only country with a long-established dividend culture. In fact, the dividend culture is truly well established in the US and parts of Europe where companies understand shareholders' demand for dividends and the need for disciplined capital allocation in order to meet their objectives. Even in the parts of the world where the dividend culture is less developed, notably Asia, companies have been quick to embrace the dividend principle as they strive to catch up with the standards set by the West. The case for global equity income investing is compelling.

"Dividend investing on a global basis means searching across a wide universe of companies - hugely diverse by country, sector and size - looking for those with the best fundamental valuations, good dividend yields and prospects for dividend growth. Some of the most attractive companies with these criteria can now be found across the globe, and not just in those countries with an established dividend culture.

"The investment philosophy of the M&G Global Equity team is to back management teams which understand value creation where this is not yet appreciated by the stockmarket. Return on capital is the key measure the team uses to gauge corporate performance and a company's efficient use of financial resources."

Jonathan Willcocks, Managing Director Global Sales at M&G, comments: "Across many parts of the globe increased life expectancy has produced a demographic change which has resulted in a growing need for income from investors. As this demand has grown, investors have started to seek diversified sources of income with a low correlation to cash or traditional fixed income products. Dividend funds offer just such a differentiated income proposition.

"In the current challenging climate, the M&G Global Dividend Fund, which we believe is a modern interpretation of an investment classic, will appeal to investors who are looking to diversify their UK equity income investments and reduce their risk by diversifying globally. By comparing the assets invested in the UK Equity Income sector (£47.3 billion) with the assets invested in the Global Equity Income universe (£796.7million) it is evident that there is an opportunity for UK investors to diversify their equity income portfolio globally. The worldwide universe offers more investment opportunities and provides exposure to potentially more dynamic markets and the potential for generating better returns and consistent income streams when the UK economy is sluggish.

"M&G has an established heritage of income investing, having managed equity income funds since 1964. This, together with our proven stock selection capability in global equities and a disciplined investment process focused on return on capital, makes our Global Equity team, which manages £10 billion of assets, second to none. We will be leveraging our scale and expertise to deliver an investment-led solution for our clients."

The M&G Global Dividend Fund provides investors with an income option, which further extends M&G's top-performing range of global equity funds, and combines M&G's expertise in both income investing and global equities.

The M&G Global Dividend Fund will be available to investors for OEIC (main register) and ISA investments, plus PEP transfers, with an initial charge of 4% (no initial charge option also available) and an annual management charge of 1.5%. The minimum investment is £500 for lump sum payments and £10 per month for regular savings. There will be an initial commission of 3% and trail commission of 0.5% for IFAs. Dividend distribution will be quarterly.