M&G marks 40th anniversary of the M&G Recovery Fund

M&G Investments is this month celebrating the 40th anniversary of the £3.1 billion M&G Recovery Fund, its flagship UK equity product.

The fund, which invests in unloved and undervalued companies, has delivered an annualised return of 15.1% since its launch in early summer 1969, compared with 10.4% from the FTSE All-Share Index, its benchmark.

Anyone who invested just £35 per month in the M&G Recovery Fund from its inception would today have a portfolio worth £645,442, a more than 38-fold return on accumulated contributions of £16,800. A similar investment in the building society would be worth £62,985.

M&G Recovery Fund has also been one of the most consistent funds available to UK retail investors. It has outperformed the market in 28 of the past 39 calendar years, a success rate of more than 70%.

In its four decades, the fund has had just three managers: David Tucker (1969-87); Richard Hughes (1987-2000) and Tom Dobell (2000 - present). Under its current manager Tom Dobell, Recovery has beaten the market for nine consecutive calendar years.

Michael McLintock, Chief Executive of M&G: says: "Its approach has been much copied by other investment groups, but M&G Recovery is the original recovery fund. While the shape of the portfolio has changed much over the past 40 years, its underlying investment philosophy remains unaltered.

"The insight gleaned more than four decades ago that today's least favoured shares could be tomorrow's most rewarding investments has been tested and has proven to deliver superior returns. It is an approach that we believe should deliver good returns for investors who are willing to take a long-term view."

Tom Dobell, current manager of M&G Recovery Fund, says: "The British public holds a derisory amount of their retirement savings in UK shares. I would like Recovery to be the default investment fund for any long-term saver looking to top up their exposure to UK equities.

"We seek out the underdogs in the market - the unloved companies with the potential to recover, whatever the economic conditions. We take a long-term view of the companies in which we invest, typically holding their stock for three to five years while they recover. I believe this matches the long-term horizons of the fund's investors."

Paul Marsh, Emeritus Professor of Finance at the London Business School and a former director of M&G, comments: "The performance record of the M&G Recovery Fund shows clearly the value of equity investment for anyone prepared to take the long-term view. It also demonstrates the efficacy of a strategy of investing in stocks that are at times unloved and undervalued by the market. M&G recognised this with its pioneering Recovery Fund long before the ‘value effect' was ‘discovered' and validated by academic researchers."