Equities

Ritu Vohora, Investment Director

February 2020

2

Ritu Vohora

• Ritu is an Investment Director and Head of Equities Investment Communications. She

provides insight on macro and market dynamics, portfolio construction and equity

investment risk to clients and the media

• Ritu is also a spokesperson for M&G, she is frequently quoted in the press and regularly

speaks on media outlets (BBC, CNBC, Bloomberg, CNN) on various investment topics

• She graduated from Warwick Business School with a BSc (hons) degree in Accounting

and Finance in 2003 and holds an MSc in Management & Regulation of Risk from the

London School of Economics (LSE)

• Ritu has completed the UKSIP level 3 certificate in investment management (IMC) and is

a CFA charterholder

• Ritu won Highly Commended for ‘Role Model of the Year’ at Investment Week’s Women

in Investment Awards 2017. She was also a finalist for the Asian Women of Achievement

(Business category) 2017 and London Asian Business awards 2017

Biography

3

M&G (Lux) Global Listed Infrastructure Fund

Risks associated with this fund

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There

is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.

The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.

The fund holds a small number of investments, and therefore a fall in the value of a single investment may have a greater impact than if it held a

larger number of investments.

Investing in emerging markets involves a greater risk of loss due to greater political, tax, economic, foreign exchange, liquidity and regulatory

risks, among other factors. There may be difficulties in buying, selling, safekeeping or valuing investments in such countries.

Convertibles are subject to the risks associated with both bonds and company shares, and to risks specific to the asset class. Their value may

change significantly depending on economic and interest rate conditions, the creditworthiness of the issuer and the performance of the underlying

company shares. In addition, issuers of convertibles may fail to meet payment obligations and their credit ratings may be downgraded.

Convertibles may also be harder to sell than the underlying company shares.

In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily

suspend the fund in the best interest of all investors.

The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.

For any performance shown, please note that past performance is not a guide to future performance.

It is also important to note that

The fund invests mainly in company shares and is therefore likely to experience larger price fluctuations than funds that invest in bonds and/or

cash.

4

Equities – being on the right side of change

Ritu Vohora, Investment Director

February 2020

For Investment Professionals only.

5

6

Key themes

The last innings of the cycle?

?

Global economy: Which

asset class will fare better?

!Trade wars

%

Interest rates:

Fed policy

Regional opportunities

?

Geopolitics

7

A monumental decade for most asset classes

Source: Refinitiv DataStream, 9th March 2009 to 31 December 2019. Total returns in USD.

Asset class performance (USD) – 9th March 2009 to 31st December 2019

-100% 0% 100% 200% 300% 400% 500% 600%

GBP vs US dollar

Dollar

China

US 10Y Treasury

Oil

German 10Y Bund

Gold

UK large cap

Europe

Emerging equities

EM dollar debt

Japan

Global high yield bonds

FTSE 250

Global equities

US

US stocks have lead the way

8

Can the current market cycle continue?

Bull markets don’t just die of old age

LONGEST bull market in history

S&P500 up 512%

Longest expansion

on record

since WW2

WEAKEST vs previous

post war expansions

(US GDP growth)

Source: Thomson Reuters DataStream, 4 February 2020, Image sources: By U.S. Navy photo 80-G-204897 - U.S. Navy National Museum of Naval Aviation photo No. 1996.253.680 [1], Public Domain,

https://commons.wikimedia.org/w/index.php?curid=7404370 , 1National Bureau of Economic Research (NBER). http://commons.wikimedia.org/wiki/Image:Spitsbergen_reindeer01.jpg - überarbeitet von mir, CC BY-SA 3.0

9

2019: a turnaround story

2019 Performance (% USD)

Please note, past performance is not a guide to future performance.

Source: DataStream, 31 December 2019. Total returns in USD.

0% 5% 10% 15% 20% 25% 30% 35%

Dollar

German 10Y Bund

US 10Y Treasury

Commodities

Global high yield bonds

EM dollar debt

Emerging markets

Japan

UK large cap

Gold

China

Europe

Brent crude oil

Global equities

UK domestic

US

Every major asset class had a positive return in 2019

Stocks led gains – S&P500 delivered its best annual return since 2013

10

But investors remained cautious in 2019

Bond-Mad Investors Ignore Stock

Market's Best Quarter Since 2012Bloomberg March 2019

Investors Pour Money Into Bond Funds at a Record Pace

WSJ July 2019

Exit

Sustainable Fund Flows

Smashed Records in 2019Morningstar

11

Uncertainties remain

Brexit

Global growth

Source: M&G. . Image sources: By Eddie Maloney from North Las Vegas, USA - Sugar Shane Autograph, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=31881354, By Max Goldberg from USA - Trump in Ames, CC BY 2.0,

https://commons.wikimedia.org/w/index.php?curid=47586256, By Hye900711 - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=46592847, This Photo by Unknown Author is licensed under CC BY-SA

‘Peak’ profits/

margin pressures

Central bank

policy

US election 2020

Coronavirus

US / China trade wars

Trade wars/

protectionism

12 Source: ICE Bank of America, Merrill Lynch, Global Fund Manager Survey, January 2020. Ship; By AlfvanBeem - Own work, CC0, https://commons.wikimedia.org/w/index.php?curid=19499332

What is the biggest risk for markets?

US election is now seen as the most significant tail risk

% of investors naming a specific issue as biggest tail risk

Investor risk appetite

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Trade war

Monetary policy impotence

Bond market bubble

Outcome of 2020 election

Jan 20

Dec 19

Other

13

Both bonds and equities posted sizeable returns in 2019

Source: DataStream, 4 February 2020

Mixed signals: who‘s right?

Past performance is not a guide to future performance

Price

In

de

x

S&P 500 Index vs. 10 year Treasury yield

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

1900

2100

2300

2500

2700

2900

3100

3300

S&P500 Index

US 10-year Treasury yield

Yie

ld

Stocks

Bonds

Yields

14

Recession dashboard: some key indicators

Source: Bloomberg, 31 December 2019 (latest data available)

No sign of an imminent recession in the world’s largest economy

US Treasury yield curve

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Inverted yield curve typically leads to recession

as it signals the Central Bank has tightened

rates too aggressively

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

3

4

5

6

7

8

9

10

11

12

13

US housing inventory (months)

A reading above 7 months suggests there is an

excess supply of houses, in turn leading to a fall in

prices and consequently a recession

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

-100%

-50%

0%

50%

100%

150%

200%

Oil price (yoy change)

A spike in oil prices could be seen as a “big

tax” that leads to lower consumption and

therefore recession

15

RECESSION GROWTH

• Generally high debt levels

• Manufacturing sector weakness

• Trade wars, geopolitical risk

• Yield curve inversion

• Muted growth

• Robust services sector

• Positioning not euphoric

• Supportive monetary policy

• Earnings delivery

• US: solid economy & labour market

Source: M&G, December 2019.

Markets are vulnerable to pull backs

Should we expect recession or continued growth ?

16

The domino effect: trade tensions versus policy easing

Source: MRB Partners, June 2019. Note dominoes depict trends in the US and aggregate global economy.

Services and consumer sectors still resilient

Manufacturing accounts for just 15% of global GDP

17

The folly of forecasting

The author

An economist is an expert who

will know tomorrow why the

things he predicted yesterday

didn't happen today”

This Photo by Unknown Author is licensed under CC BY

The author

We have two classes of forecasters:

Those who don’t know - and those who

don’t know, that they don’t know

J.K Galbraith (US economist)

Laurence J. Peter

18

-2%

0%

2%

4%

6%

8%

10%

12%

Apr-

90

Apr-

91

Apr-

92

Apr-

93

Apr-

94

Apr-

95

Apr-

96

Apr-

97

Apr-

98

Apr-

99

Apr-

00

Apr-

01

Apr-

02

Apr-

03

Apr-

04

Apr-

05

Apr-

06

Apr-

07

Apr-

08

Apr-

09

Apr-

10

Apr-

11

Apr-

12

Apr-

13

Apr-

14

Apr-

15

Apr-

16

Apr-

17

Apr-

18

Apr-

19

Focus on the facts: valuations

Equity earnings yield and real US 10-year government bond yields

Source: Source: Thomson Reuters DataStream, 31 January 2020. Earning’s yields are not inflation adjusted

Yie

ld

Stocks currently provide a margin of safety

MSCI AC World

ex-US

US (S&P 500)

US 10Y Real

Yield

Are you compensated to take risk?

Global equity

ex-US equity

risk premium:

7.4%**

19

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

MSCI EM MSCI JAPAN MSCI EUROPE EXUK

MSCI USA MSCI UK MSCI AC WORLD

Earnings growth

Multiple expansion

Dividend yield

Total return

Performance decomposition

Source : DataStream MSCI, 31 December 2019,

Past performance is not a guide to future performance.

2019’s gains driven by multiple expansion

Regional total return breakdown – 2019

Price rises need to be supported by earnings to be sustainable

20

Regional scorecard

Source: Thomson Reuters Datastream, 31 January 2020. US market using S&P 500, UK market using FTSE All Share, MSCI for all other markets. Image source: By Ecallow - Own work, CC BY-SA 3.0,

https://commons.wikimedia.org/w/index.php?curid=23102709..

19.1x

15.2x

14.5x

13.3x

23%

16%

12%

17%

1.8%

3.5%

2.4%

2.7%

Return

on EquityValuation

PE FY1 Dividend

yield

10%

8%

6%

14%

Earnings

expectations

Markets have front run economic and earnings upturn

21

Earnings subdued due to margin pressures

Source: Refinitiv DataStream, December 2019. Net % = 3Month moving average of NFIB Survey: % report plan higher prices less % lower prices

US National Federation of Independent Business survey: % of surveyed companies

0

5

10

15

20

25

30

35

40

0

5

10

15

20

25

30

35

40 Net % companies planning to raise prices

% companies planning to raise wages

A narrowing gap between pricing power and wages

Expect a modest recovery versus strong rebound

22

Will Global ex US be Great Again?

Source: Refinitiv, Datastream 31 January 2020 and Haver Analytics, IMF, national sources, Morgan Stanley Research forecasts Note: Global ex US real GDP growth is the PPP-based GDP-weighted average. *RoW is global excluding US and is the PPP-

based GDP weighted average.

US market has dominated returns

50%

70%

90%

110%

130%

150%

170%

MSCI USA

MSCI EUROPE

MSCI JAPAN

MSCI AC WORLD EXUS

MSCI EM

Regional performance

Earnings and growth pick up needed in the Rest of the World vs US

23Image sources: By Michael Vadon - →This file has been extracted from another file: Donald Trump August 19, 2015.jpg, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=42609338. Janet Yellen: United States Federal Reserve - http://www.federalreserve.gov/aboutthefed/bios/board/yellen_janet_rdax_161x201.jpg, Public Domain, https://commons.wikimedia.org/w/index.php?curid=40726336. By Foreign and Commonwealth Office - Flickr, OGL, https://commons.wikimedia.org/w/index.php?curid=32138289

Europe

EM

Japan

UK

US• Economy on solid footing

• Robust earnings but growth set to slow. US election

• Home to quality firms – strong cashflows & div. growth

• Growth has slowed, earnings subdued

• Unloved and undervalued, possible surprises?

• Geopolitical risks/ trade tensions/ market structure

• Brexit uncertainty

• Sterling volatility

• Record yield gap between stocks vs bonds

• Low valuation

• Rising returns vs prices

• Improved corporate governance

• Improving fundamentals

• Pockets of attractive valuations

Polarised universe – be selective

Where are the opportunities and risks?

24

Outlook

Risks persist:

Stay invested,

diversified & on the

right side of change

A decade of US

dominance:

2020 is about earnings

delivery

Valuations matter:

Stock dispersion

means selectivity is

important

100

BONDS

EQUITIES

PROPERTY

25

For Investment Professionals only.

Investing in Global Listed Infrastructure

M&G (Lux) Global Listed Infrastructure Fund

26

Reasons to consider investing in listed infrastructure

Source: M&G, PCR team, 25 August 2017. Yield and volatility of Barclays Global Aggregate Total Return Index (‘Fixed Income’), MSCI ACWI (‘Equities’), and M&G proprietary listed infrastructure universe (‘Listed infrastructure’), from 1 January

2010 to 31 December 2016. Cash based on ECB interest rates as at 31 August 2018. M&G’s infrastructure universe vs MSCI AC World. Factset, 30 June 2017 *As at 31 January 2017. **As at 27 October 2017

A unique asset class

A genuinely differentiated risk/return profile

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Historical yield vs volatility payoff across asset classes

Yie

ld

Volatility

Listed

infrastructure

Fixed

Income

Cash

Equities

Past performance is not a guide to future performance

Lower volatility

Beta* <1

Yield > Equities

3% 2.3%

Drawdown:

diversification

benefits

27 Source: M&G, 2019. Illustrative figures only. FactSet, 31 December 2017, US dividend achievers vs S&P 500 (annualised 25-year quarterly returns)

Our philosophy and approach – focus on dividend growth, not yield

0

5

10

15

20

25

30

2018 2021 2024 2027 2030 2033 2036

Div

ide

nd

(U

SD

)

Dividend (stock yielding 6%, no growth) Dividend (stock yielding 4%, 10% growth)

The power of long-term compounding

28

Philosophy and approach

Investing in businesses owning or controlling:

Source: M&G, 2019

Our definition of listed infrastructure: focusing on physical assets

Strategic assets with physical backing and long-term growth

Critical infrastructure Long-life concessions Perpetual royalties

29

Philosophy and approach

Source: M&G, 2019 *Expected annual dividend increase, for illustrative purposes only. Internal guidelines only, subject to change

Our definition of listed infrastructure: capturing long-term growth

A stable, dependable foundation…..augmented by growth

Ind

ustr

y &

su

b-i

nd

ustr

yD

ivid

en

d p

rofi

le*

Utility Energy Transport

Electricity Pipelines Toll roads

Natural gas Terminals Railways

Renewables LNG Airports

Water Ports

Waste Public transit

Health Education Civic

Hospitals Schools Government

State care Universities Security

Student housing

Communication Transactional Royalty

Towers Payments Energy

Data centres Exchanges Mineral

Optical networks

Satellite

Infrastructure class

Economic (65-75%) Social (10-20%) Evolving (15-25%)

30

Our experience so far

Source: Morningstar Inc., Pan European database 31 December 2019, Euro A class shares, net income reinvested, price to price. *Past performance shown to 30 September 2018 is the MSCI ACWI Index .

Past performance shown from 01 October 2018 is the MSCI ACWI Net Return Index.

Past performance is not a guide to future performance

Past performance is not a guide to future performance

2019

%

2018

%

2017

%

2016

%

2015

%

M&G (Lux) Global Listed

Infrastructure Fund36.7 -1.7 N/A N/A N/A

Comparative Index* 28.9 -4.5 9.5 11.7 9.3

Coping with different market conditions

Downside protection and upside capture

Hit rate 32%

Av. relativereturn

-0.4%

Up markets

Hit rate 86%

Av. relativereturn +2.96%

Down

markets

31

Investing beyond the traditional realm of economic infrastructureSelected dividend announcements in 2018 and 2019

Dividend growth across the portfolio

Source: Bloomberg, 31 March 2019.*Year-on-year increase.

Past performance is not a guide to future performance

+28%

+12%*

+29%

+9%

+21%*

+12%*

+18%

+30%

+50%

32

Outlook

Source: M&G, 2019

An asset class driven by powerful long-term themes

Powerful tailwinds to drive long-term performance

Renewable energy

Universal connectivity

Urbanisation

Water and waste management

Social and demographic shifts

Transportation of the future

33

M&G (Lux) Global Listed Infrastructure Fund

Source: M&G, 2019

Summary

A long-term strategy to deliver long-term solutions

Rising income backed

by structural growth and

inflation-protected

revenues

Listed infrastructure is an asset

class with compelling

characteristics

A modern and differentiated

approach to capture long-term

growth

34

www.equitiesforum.com

@equitiesforum

For Investment Professionals and Institutional Investors only. Not for onward distribution. No other persons should rely on any information contained within.

Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to Qualified Investors according to the Swiss Collective Investment

Schemes Act, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by

the initial recipient (provided it is a Qualified Investor) only.

In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G (Lux) Investment Funds 1 reg. no 1551

The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in England and Wales in respect of M&G

Investment Funds and in Luxembourg in respect of M&G (Lux) Investment Funds.

In the Netherlands, all funds referred to, are UCITS and registered with the Dutch regulator, the AFM.

This information is not an offer or solicitation of an offer for the purchase of investment shares in one of the Funds referred to herein. Purchases of a Fund should be based on the current Prospectus.

The Instrument of Incorporation, Prospectus, Key Investor Information Document, annual or interim Investment Report and Financial Statements, are available free of charge, in paper form, from M&G

International Investments S.A. or one of the following - M&G International Investments S.A., German branch, mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main; the Austrian paying agent:

Société Générale Vienna Branch, Zweigniederlassung Wien Prinz Eugen-Strasse, 8-10/5/Top 11 A-1040 Wien, Austria; the Luxembourg paying agent Société Générale Bank & Trust SA, Centre

operational 28-32, place de la Gare L-1616 Luxembourg; the Danish paying agent: Nordea Bank Danmark A/S Issuer Services, Securities Services, Hermes Hus, Helgeshøj Allé 33, Postbox 850, DK-

0900, Copenhagen C, Denmark; Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, Spain; M&G International Investments S.A. French

branch; from the French centralising agent of the Fund: RBC Investors Services Bank France; or from the Swedish paying agent: Nordea Bank AB (publ), Smålandsgatan 17, 105 71 Stockholm,

Sweden. For Switzerland, please refer to M&G International Investments Switzerland AG, Talstrasse 66, 8001 Zurich or Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, 8021

Zurich, which acts as the Swiss representative of the Schemes (the "Swiss Representative") and acts as their Swiss paying agent.

For Italy, they can also be obtained on the website: www.mandgitalia.it. For Ireland, they are available in English language and can also be obtained from the Irish facilities agent, Société Générale

SA, Dublin Branch, 3rd Floor IFSC House – The IFSC Dublin 1, Ireland. For Germany and Austria, copies of the Instrument of incorporation, annual or interim Investment Report, Financial Statements

and Prospectus are available in English and the Prospectus and Key Investor Information Document/s are available in German.

Before subscribing investors should read the Prospectus, which includes a description of the investment risks relating to these funds.

The information contained herein is not a substitute for independent investment advice.

This financial promotion is issued by M&G International Investments S.A. Registered Office: 16, Boulevard Royal, L-2449, Luxembourg. The Portuguese Securities Market Commission (Comissão do

Mercado de Valores Mobiliários, the “CMVM”) has received a passporting notification under Directive 2009/65/EC of the European Parliament and of the Council and the Commission Regulation (EU)

584/2010 enabling the fund to be distributed to the public in Portugal.

36

Have markets front run economic recovery?

Source: Thomson Reuters Datastream, 31 January 2020.

MSCI AC World vs JP Morgan Composite manufacturing PMI

0.6

100.6

200.6

300.6

400.6

500.6

600.6

700.6

48.0

49.0

50.0

51.0

52.0

53.0

54.0

55.0

JPM Composite manufacturing PMI MSCI AC World

37

0

1

2

3

4

5

6

7

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

%

Federal funds rate

US FOMC December 2018 forcasts (median)

US FOMC December 2019 forecasts (median)

Don’t fight the Fed Change in policy backdrop - central banks are trying to boost growth

An important driver of asset prices

Federal funds policy rate expectations

Source: Refinitive, DataStream, 31 December 2019

Market expectations on 31 December 2019 (mean)

%

38 Source: JP Morgan FX Strategy January 2020

US Presidential election 2020

Dollar Weak $ Laissez Faire

Trade Protectionist Free Trade

Fiscal Deficits Austerity

Regulatory/Taxes Big Govt Small Govt

Energy Reg./Restrain Dereg./Export

Candidates policy vectors

Biden Buttigieg Trump

Warren Sanders

39

2020: Where are we?

Source: IMF, World Economic Outlook, October 2019. *Thomson Reuters Datastream, 31 December 2019

Global growth remains resilient

Global earnings expectations stabilised

Global Earnings Picture* (12month forward EPS)Muted but consistent world GDP growth

0

1

2

3

4

5

6

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Yo

Y C

han

ge

(%

)

0% 2% 4% 6% 8% 10% 12% 14%

HSCEI

FTSE MIB ITALY

FTSE-100 INDEX

HANG SENG INDEX

MSCI JAPAN

MSCI Europe

S&P 500 COMPOSITE

MSCI AC WORLD

MSCI SPAIN

EURO STOXX 50

CAC 40 INDEX

DAX INDEX

40

China – an economic superpower and engine of growth

Source: Factset, Morgan Stanley Research, August 2019, World Bank, J.P. Morgan. * 2015 Deloitte study, uis.enesco.org visualcapitalist.com, IMF, Standard Chartered, March 2019. This Photo by Unknown Author is licensed under CC BY-NC

1 in 5 people are Chinese

15%

% Share of global

GDP

$170.5b

$370.6b$476.5b

Japan China US

2nd largest R&D spender

20% 65%

2015 2017

China’s economy:

% size of US economy

Share of global economic growth (forecast)

China 33% Other Asia 30%

Middle

East/North-

Africa 4%

Euro area 4%

LATAM 3% Africa 2%

Other Europe 3%Canad

a 1%

USA 11%

Rest of the world 8%

?

41

-20000 -10000 0 10000 20000 30000 40000 50000 60000

Bonds Global CurrenciesEquities Global

Bonds EUR Corp. Inv. GradeBonds USD

Bonds Emerging MarketsBonds Target Maturity

Bonds Global CorporatesBonds USD Short-TermAsset-backed Securities

Bonds EURBonds Global High Yield

Bonds Emerging Markets - Local CurrencyBonds Emerging Markets Corporate

Bonds FlexibleBonds Asia Hard Currencies

Equities Alternative Long/ShortEquities Alternative Market Neutral

Equities EurolandBank loan/Floating rate

Equities EuropeActive Index ETF

Source: Broadridge FundFile as at end November 2019. All data in EUR and based on estimated net sales. Data based on funds classified as Fund Region International which represents the cross border fund flows.

Active and Passive categorisation determined by Broadridge FundFile. Passive data has been split into index tracker funds and ETFs. Sector data excludes Money Market and Fund of Fund sectors. Photo by Unknown Author is licensed under CC BY-SA

Cross border top selling sectors

Active & passive split by sector – estimated net sales, €m (Jan - Nov 2019)

Top net selling sectors in Europe (cross-border)Investors remained cautious in 2019

42

Equity valuations have re-rated

Source: Datastream, 9 January 2020.

0%

5%

10%

15%

20%

25%

IBE

S 1

2m

fw

d P

E

Current IBES 12m FwdPE

25 year average

Jan-19

UK market looks attractive relative to other developed markets

12m forward Price/Earnings ratio vs 25 year average

43

Valuations

Source: M&G, Thomson Reuters Datastream, 9 January 2020. For bonds and cash, real yield is defined as the nominal yield minus expected inflation. For equities, real yield is defined as an inverted p/e ratio,

using forward consensus data. The above data is a hypothetical representation for illustrative purposes only and is not representative of any M&G product or strategy. No representation is being made that any

account, product, or strategy will or is likely to achieve profits, losses, or results similar to those shown.

How are assets priced today?

Valuations are more challenging

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

DM govt bonds Corporate bonds EM govt bonds US equity EM equity Japan equity Europe equity

Re

al yie

ld*

(%)

Dec 2018 Current

44

It’s all about earnings!

Consensus EPS growth expectations

DM US Europe Japan EM0%

5%

10%

15%

20%2020E 2021E

Source: Consensus earnings expectations 2020, JP Morgan, December 2019

Expectations for 2020 look too high

45

Whats in style?

Source: Morgan Stanley Eurostat, MSCI. IBES, DataStream, 15 January 2019

A cross sectional look at valuations

2020 – a better year for value?

Average relative valuations

-3

-2

-1

0

1

2

3

4

Avg

. R

ela

tive

Va

lua

tio

ns O

n P

E, P

BV

& P

D(1

-Y Z

-sco

re)

46

Attractive

spread

S&P 500: Price to book spread between 25th and 75th percentile

Value is cheap relative to history

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Price

-to

-bo

ok (

P/B

)

25th percentile 75th percentile

Source: Thomson Reuters Datastream, 30 June 2019. Highlighted bars indicate periods where P/B is greater than the current P/B spread.

Valuation dispersionsUS equities: not a uniform asset class

47

M&G (Lux) Global Listed Infrastructure Fund

Fund name M&G (Lux) Global Listed Infrastructure Fund

Fund manager Alex Araujo

Launch date (manager tenure) October 2017 (October 2017)

Fund size €143.9 million

Investment objective • To provide a combination of capital growth and income to deliver a return that is higher than that of the global

equities market over any five-year period;

• To increase the income stream every year in US dollar terms.

Investment style Global equity, dividend growth, bottom-up stock selection, ESG integrated

Typical number of holdings 40-50

Comparative index MSCI AC World Net Return Index

Valuation currency: US dollars

Fund structure Luxembourg SICAV - UCITS

Pricing/dealing frequency Daily dealing

Distribution frequency Quarterly

Source: M&G, 31 December 2019

Fund overview

48 Source: M&G, 31 December 2019

North America,

49.4%

Europe ex UK, 23.2%

UK, 17.0%

Australia, 4.8%

Hong Kong, 1.5%

Singapore, 1.5%

Brazil, 1.6%

Cash, 1.0%

Utilities, 25.3%

Transport, 20.8%

Energy, 16.8%

Communications, 11.3%

Social, 12.1%

Royalty, 7.9%

Transactional, 4.9%

Cash, 1.0%

Fund weighting by industry Fund weighting by country/region

Infrastructure class Economic Social Evolving

Fund weighting 63% 12% 24%

Fund positioning – our differentiated approach Investing beyond the traditional realm of economic infrastructure

Diversified across industry, geography and infrastructure class

49

For Investment Professionals and Institutional Investors only. Not for onward distribution. No other persons should rely on any information contained within.

Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to Qualified Investors according to the Swiss Collective Investment

Schemes Act, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by

the initial recipient (provided it is a Qualified Investor) only.

In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G (Lux) Investment Funds 1 reg. no 1551

The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in England and Wales in respect of M&G

Investment Funds and in Luxembourg in respect of M&G (Lux) Investment Funds.

In the Netherlands, all funds referred to, are UCITS and registered with the Dutch regulator, the AFM.

This information is not an offer or solicitation of an offer for the purchase of investment shares in one of the Funds referred to herein. Purchases of a Fund should be based on the current Prospectus.

The Instrument of Incorporation, Prospectus, Key Investor Information Document, annual or interim Investment Report and Financial Statements, are available free of charge, in paper form, from M&G

International Investments S.A. or one of the following - M&G International Investments S.A., German branch, mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main; the Austrian paying agent:

Société Générale Vienna Branch, Zweigniederlassung Wien Prinz Eugen-Strasse, 8-10/5/Top 11 A-1040 Wien, Austria; the Luxembourg paying agent Société Générale Bank & Trust SA, Centre

operational 28-32, place de la Gare L-1616 Luxembourg; the Danish paying agent: Nordea Bank Danmark A/S Issuer Services, Securities Services, Hermes Hus, Helgeshøj Allé 33, Postbox 850, DK-

0900, Copenhagen C, Denmark; Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, Spain; M&G International Investments S.A. French

branch; from the French centralising agent of the Fund: RBC Investors Services Bank France; or from the Swedish paying agent: Nordea Bank AB (publ), Smålandsgatan 17, 105 71 Stockholm,

Sweden. For Switzerland, please refer to M&G International Investments Switzerland AG, Talstrasse 66, 8001 Zurich or Société Générale, Paris, Zurich Branch, Talacker 50, P.O. Box 5070, 8021

Zurich, which acts as the Swiss representative of the Schemes (the "Swiss Representative") and acts as their Swiss paying agent.

For Italy, they can also be obtained on the website: www.mandgitalia.it. For Ireland, they are available in English language and can also be obtained from the Irish facilities agent, Société Générale

SA, Dublin Branch, 3rd Floor IFSC House – The IFSC Dublin 1, Ireland. For Germany and Austria, copies of the Instrument of incorporation, annual or interim Investment Report, Financial Statements

and Prospectus are available in English and the Prospectus and Key Investor Information Document/s are available in German.

Before subscribing investors should read the Prospectus, which includes a description of the investment risks relating to these funds.

The information contained herein is not a substitute for independent investment advice.

This financial promotion is issued by M&G International Investments S.A. Registered Office: 16, Boulevard Royal, L-2449, Luxembourg. The Portuguese Securities Market Commission (Comissão do

Mercado de Valores Mobiliários, the “CMVM”) has received a passporting notification under Directive 2009/65/EC of the European Parliament and of the Council and the Commission Regulation (EU)

584/2010 enabling the fund to be distributed to the public in Portugal.