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M&G takes steps to limit size of Woolnough's bond funds

by Matthew Goodburn on Jul 24, 2012 at 12:07

M&G takes steps to limit size of Woolnough's bond funds

M&G is taking steps to limit the size of Richard Woolnough's Strategic Corporate Bond and Corporate Bond funds.

On a conference call with investors Woolnough said that while M&G would look to slow inflows into these two funds, the more flexible mandate of the M&G Optimal Income fund meant it would remain fully open to investors.

Woolnough told investors: 'Both funds have grown rapidly and as they have become larger it has become more difficult to apply my investment process. The M&G Corporate bond will remain open but we will look to slow inflows.

The M&G Corporate Bond fund had grown to over £6.31 billion at the end of June while the M&G Stategic Corporate Bond fund had reached more than £5.16 billion.

M&G's global head of retail sales Jonathan Willcocks said that the group would be contacting its largest clients in the coming days to explore ways to slow inflows to the two funds.

'There is no simple step to slowing funds but we will contact key clients to see if we can reduce the pace of inflows,' he said.

In the call, Woolnough said that the US economic crisis had now been largely resolved but that Europe had yet to reach its critical moment.

'The huge boom created by the Fed has come to an end and the US economy has worked its way through the crisis and the inventory but Europe is not so far through.'

'In Europe the average divergence between countries in terms of unemployment is huge and the tools to get convergence are not working. The monetary policy of the eurozone means the strong get stronger while the weak get get weaker because the weakest have the tightest fiscal deficit.

'Countries like Spain don't have an option to devalue the currency like the Swiss or the UK so the problem gets worse. Unlike in the US, we have yet to reach the crunch point where the problem wgets resolved,. That means full union or currencies reintroduced.

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