M&G Optimal Income fund

Andy Parsons, Advice team manager at The Share Centre, explains how investors looking to generate additional income while adding some spice to their portfolio, could benefit from the M&G Optimal Income fund.

"The M&G Optimal Income fund is one of the most unconstrained bond funds available on the market. M&G has long been respected as having a proven track record for delivering quality income funds and this fund is no exception, currently rated as ‘AAA' by S&P and ‘AA' by OBSR.

"Launched in December 2006, fund manager Richard Woolnough has the freedom to invest across the entire fixed income universe. The fund is unconstrained in that it allows Woolnough flexibility to invest as much as 100 per cent in Gilt or High Yield debt. However, equity exposure is capped to a maximum of 20 per cent and non-sterling currency exposure is also limited to a maximum of 20 per cent.

"Given the increasing demands of investors to seek income, Woolnough uses various instruments available to him to ensure that investors benefit from a total return. The fund's flexibility means he can make money not just when interest rates are coming down, but also when interest rates go up.

"The fund aims to outperform its sector over the medium to long-term and provides a total return to investors based on exposure to optimal income streams in investment markets. In terms of performance, year to date the fund has returned growth of 30.82% and currently has a yield of 4.98%.

"The fund is suitable for an investor looking to add additional spice to their income portfolio and who wishes to do so through the investment experience and knowledge of a well respected fund manager and fund house."