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The ongoing credit crunch claimed its highest profile victim in March when Bear Stearns, a Wall Street investment bank, got into trouble and was acquired by JP Morgan for a mere $10 per share. The share price was $77 at the start of the
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One fund that avoided this crash was M&G American. The manager, Aled Smith, had conducted a strategic review of the portfolio at the start of the year. The conclusion was that the fund had more exposure to credit-sensitive companies than Mr Smith felt comfortable with in the current climate. To redress this balance Bear Stearns was sold from the portfolio at a price of $74 per share.
This highlights the importance of a fund manager regularly reappraising the shares in their portfolio, especially during a period of market turbulence when the picture can change significantly. Aled Smith didn’t predict that Bear Stearns would actually go bust, but he made himself fully aware of the risks in his portfolio and took decisive action to bring them within acceptable levels. Investors in his fund benefited as a result.
Such astute management supports our belief that Aled Smith is one of the top managers in the sector. His M&G American Fund remains a part of the Wealth 150, our list of favourite funds in each sector.
» Key Features of the M&G American Fund
Fund research is provided by Hargreaves Lansdown. Hargreaves Lansdown is an independent broker offering unit trust, stockbroking and other pension and investment services. No news or research item is a personal recommendation to deal.