M&G Investments has fired the starting gun on what it hopes will become a substantial presence in the active exchange-traded fund market, launching the first products in a new ETF range backed by a £350mn cornerstone commitment from its Life business.
The move signals a strategic shift for the £343bn asset manager as it seeks to deliver its well-known active management capabilities through a vehicle long associated with low-cost passive investing.
The new range aims to bring the firm’s deep research culture, unconstrained investment style and long track record in fixed income and equities into a wrapper prized for transparency, liquidity and efficiency. It also reinforces M&G’s leadership ambitions in the UK while accelerating its push into key European markets.
The initial launch centres on three fixed-income strategies run by portfolio managers Miles Tym and Rob Burrows, part of M&G’s £137bn fixed income division. Together they target outperformance over five-year periods while retaining the flexibility to deviate meaningfully from their benchmarks when valuations or macro conditions warrant it.
Which active ETFs has M&G launched?
The M&G UK Index-Linked Gilts Active UCITS ETF seeks to deliver capital growth and income superior to the UK’s inflation-linked gilt market. Although it uses the iBoxx UK Gilt Inflation-Linked Index as a reference point, the portfolio is unconstrained by that benchmark.
The fund invests primarily in sterling-denominated, investment-grade bonds issued or guaranteed by the UK government. Its unconstrained approach allows the managers to position around shifts in inflation expectations, Bank of England policy and supply-demand dynamics in the linker market, segments of the gilt curve that have seen heightened volatility since the 2022 LDI crisis.
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Its sister product, the M&G UK Gilts Active UCITS ETF, follows a similar philosophy but targets the conventional gilt market. Aiming to deliver higher capital growth and income than the iBoxx GBP Gilt Index over five years, it invests at least 90% of its assets in fixed or floating-rate UK government bonds. Here, too, the managers employ a flexible approach, taking positions where they believe gilts are mispriced relative to macro fundamentals or policy expectations.
Across the Atlantic, the M&G US Treasury Bond Active UCITS ETF offers an unconstrained take on the world’s largest government bond market. Its benchmark, the ICE BofA US Treasury Index, is used only for performance comparison; portfolio construction is instead shaped by the team’s views on duration, yield-curve positioning and macroeconomic inflection points. The fund primarily invests in US-dollar-denominated, investment-grade Treasuries and is available in both USD and GBP-hedged share classes, an important appeal for European allocators navigating currency volatility.
Notably, M&G is also expanding beyond fixed income. Due to launch shortly, the M&G Global Maxima Equity UCITS ETF targets outperformance of the global equity market over five years through a machine-learning-driven approach. Built on 25 years of data from more than 1,000 companies, the model identifies firms expected to deliver superior returns at moments of operational or financial “maxima” inflection points often missed by traditional analysis. At least 80% of assets will be invested in global equities across sectors, market caps and geographies, including emerging markets.
Strategic milestone for M&G Investments
Joseph Pinto, chief executive of M&G Investments, called the launch a “strategic milestone”, emphasising the firm’s commitment to offering active strategies “unconstrained by benchmarks and built to navigate complexity” within an ETF wrapper. For Ciaran Mulligan, chief investment officer of M&G Life, the appeal lies in combining “alpha generation with liquidity and trading efficiency”, benefits that enhance multi-asset portfolios while keeping costs lower for policyholders.
With active ETFs gaining momentum globally as investors seek precision, transparency and adaptability, M&G’s entry, backed by scale and a broad pipeline, positions it as a potential new heavyweight in one of the industry’s fastest-growing segments.
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