M&G Optimal Income - Alternative

nxdmsandkaskdjaqd
nxdmsandkaskdjaqd Posts: 782 Forumite
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in Savings & investments
I looking for an alternative fund to M&G Optimal Income which I already hold. Looking for something that is of a similar stature and quality, and if necessary the same or similar holdings.

Any thoughts would be appreciated.

Reason, just looking to spread my risk across different fund managers.

Comments

  • masonic
    masonic Posts: 23,275 Forumite
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    Not sure that a fund that has the same or similar in holdings is going to do much to spread your risk. Both managers will likely hold very similar views and position their funds to take advantage of the same opportunities or avoid the same risks.

    Having said that, I was looking at New City High Yield Trust the other day. It is an investment trust rather than an open-ended fund, so could offer some protection against a stampede for the exits should the bond market collapse.

    The past performance of NCYF vs M&G Optimal Income is remarkably similar. If anything, that would put me off holding both.
  • nxdmsandkaskdjaqd
    nxdmsandkaskdjaqd Posts: 782 Forumite
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    masonic wrote: »
    Not sure that a fund that has the same or similar in holdings is going to do much to spread your risk.

    Having said that, I was looking at New City High Yield Trust the other day.

    Afraid I am not into Investment Trusts so need to keep to OEIC. Another reason for finding an alternative is such that I can deal with Capital Gains by selling my entire holding of the fund and buying an alternative.
  • masonic
    masonic Posts: 23,275 Forumite
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    Well, there aren't many funds around with the same sort of flexibility in what it can invest in. You could take a look at Richard Woolnough's other fund, M&G Strategic Corporate Bond, but it is pretty much fixed interest only.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    masonic wrote: »
    Having said that, I was looking at New City High Yield Trust the other day. It is an investment trust rather than an open-ended fund, so could offer some protection against a stampede for the exits should the bond market collapse.

    The past performance of NCYF vs M&G Optimal Income is remarkably similar. If anything, that would put me off holding both.
    It has a similar trajectory and has given the same sort of gain over the last 7 or 8 years. However, if you look at the extent of its fall in 2008-9 credit crunch or any of the several dips since, you can see it's more volatile. And over a different set of circumstances, the difference in approaches means you could get quite a different result. The direction of equity and bond markets in recent years has been a bit unusual.

    The M&G fund navigated the credit crunch better than a lot of its strategic peers which is one of the reasons I have confidence to keep using it - has served very well. I also have NCYF but don't consider them direct substitutes. Unfortunately I don't really have an alternative as a direct rival to M&G O I with the same record. You could combine M&G's other fund mentioned by Masonic with something else - If the main objective is to cash out capital gains this week, you only have to stay out of it a month! :)

    But that doesn't give you the same diversification of managers that you might be looking for.
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