ISA’s at M&G | ISA guides

ISA’s at M&G February 27

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M&G offers two types of ISA: the mini ISA and the maxi ISA. Up to £3,000 cash can be invested in a min ISA, or £4,000 in stocks and shares. A combination of cash and stocks and shares - or just stocks and shares - can be invested in a maxi ISA, up to the value of £7,000. However, only £3,000 of that £7,000 can be invested in cash.

There are seven funds to choose from should a saver decide to invest in stocks and shares, and these are divided into three categories: funds to be invested in for income; funds which promise growth; and funds for investors looking to diversify. No initial charge is payable on any M&G ISA account if a lump sum is invested, while no exit fees are payable if the money is invested for five years or more.

Here is a brief guide to the range of funds offered by M&G to ISA stocks and shares investors:

Investing for income

M&G corporate bond fund

The M&G corporate bond fund aims to achieve regular income for investors who wish to avoid exposing themselves to the more risky - although potentially more lucrative - stock market. Money is invested in fixed and variable rate bonds issued by individual firms; and gilts - bonds issued by the British government. Although the fund made a return of just 0.1 per cent over the last 12 months, it has made 13.7 per cent over the last three years.

M&G extra income fund

The M&G extra income fund is designed to pay a steadily growing income to its investors - with a target yield of 50 per cent higher than that of the FTSE all-share index, although this is subject to short term fluctuation. 25 per cent of the investor’s money is invested in corporate bonds, and 75 per cent in high-yielding equities - in other words, ones that pay a large dividend compared to their share price relative to other similar-sized companies. The fund delivered a return of 16.5 per cent last year.

Investing for growth

M&G American fund

The M&G American fund aims to achieve long term capital growth. In order to do this, money is unvested into North American securities, including Microsoft, Procter & Gamble and Nike. The fund is headed by Aled Smith, who scours the market for firms where “positive internal change” is being effectuated; where investment is being made into research and development; and where external factors (eg globalisation) influence market sectors, for he believes that improvements in company value will follow as a result of these modifications. The M&G American fund has grown by 7.5 per cent in the last 12 months.

M&G global leaders fund

The M&G global leaders fund is gunning for long term total returns. The fund manager, Aled Smith, has been given a free reign in order to do this, and is allowed to invest in any company he sees fit across all industries, sectors and global markets. The global leaders fund has made a total return (the combination of income and growth of capital) of 14.4 per cent in the last 12 months.

M&G recovery fund

The M&G recovery fund seeks to achieve long term capital growth through investing in UK companies which Tom Dobell, the fund manager, considers “undervalued”. Mr Dobell has managed to secure a total return (the combination of income and growth of capital) of 20.7 per cent for his investors over the last 12 months.

Funds for investors looking to diversify

M&G cautious multi asset fund

The M&G cautious multi asset fund invests in equities, fixed income securities, commercial property and other assets including leveraged loans in a bid to secure “competitive” returns over a wide range of market conditions. It is a new fund, and so no comparisons can be with previous years.

M&G property portfolio

The M&G property portfolio hopes to guarantee strong long term returns by investing in commercial property. The fund reported total returns of 11 per cent in the year ending December 29th 2005.

Written Exclusively by AdFero for ISA Guides

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