Fund house M&G is to abandon the original remit of its £2.1bn Global Basics fund in a bid to reinvigorate the product.
The asset manager has proposed permitting the fund to allocate at least 80 per cent of assets to global equities with no restriction on sector, size or geography. The current policy requires the fund to hold at least 70 per cent in "basic" industries such as commodities.
The investment objective on the fund would also change under plans being put to shareholders: the current focus on long-term capital growth would switch to a total return objective targeting outperformance of the MSCI All Country World index over any five-year period. M&G said this "better reflects the overall return of the fund".
In the event of shareholder approval, the fund would be renamed as M&G Global Themes.
In recent years M&G has attempted to revitalise the product, the asset base of which has shrunk significantly since the departure of Graham French, creator of the Global Basics concept. In 2015 Randeep Somel, Mr French's replacement, was replaced as manager of the M&G Managed Growth fund to allow him to concentrate on Global Basics. A new lead manager for the latter fund, Jamie Horvat, came on board later that year.
Global Basics has returned slightly less than its IA Global peer group average over one and three years but lags significantly over a longer time horizon, according to FE Analytics. In the past five years the fund has returned 46.3 per cent, versus the peer group's 79.2 per cent average.
Commenting on the proposals, Mr Horvat said: "Over recent years trends within the global economy have evolved so the removal of the restriction to invest mainly in basic industries will enable us to widen the themes in the fund. We are keen to capitalise on sectors and industries that benefit from increased demand for healthcare and medicines to support ageing populations, water and waste management, clean energy and cyber-security.
“The original philosophy of the fund of exploiting global structural changes remains intact.”
