InvestmentsMar 5 2013

M&G’s French apologises for 2012 performance hit

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M&G Investments’ Graham French has apologised to investors for a “blip” which hit the performance of his £5.2bn M&G Global Basics fund last year.

Mr French has repositioned the fund away from commodities, which have helped it outperform other commodities-focused products, and is instead focusing on consumer stocks.

But this did not help the Global Basics fund avoid performance headwinds last summer.

“Last summer was one of the worst I can remember on the fund,” Mr French said. “We owned G4S as one of our largest holdings [during the Olympics problems]. It was also the first time commodities really started to underperform.

“We took the decision to exit most of our commodities holdings, which was a painful decision. When we own large stakes we don’t take the decisions lightly but it proved to be a good decision.”

The manager said May 2012 was one of the worst the Global Basics fund had experienced, as it lost 7.9 per cent during the month. For 2012 the fund gained just 1 per cent, ranking it firmly in the bottom quartile of the IMA Global sector.

But Mr French said the fund’s new focus on consumer stocks meant it was well placed to improve performance, and had already performed better in recent months. In six months to March 4 it gained 14.1 per cent, although this was still bottom quartile in the IMA Global sector.

He said: “We had to take criticism last summer but over the last six to nine months this fund has done very well and we are in a good place to go on from here.”