A few years ago, my financial adviser recommended that I should make a substantial pension contribution into the Recovery Fund, part of a stable of unit trusts run by M&G, one of the UK's leading fund management houses.

Ever since then, I have pondered the wisdom of this move. All the more so this week, after reading an excellent article by a colleague, Jeff Prestridge, in the newly launched personal finance magazine Bloomberg Money.

Jeff examines the performance of M&G's funds and his conclusion is damning. Over the past three years, with few exceptions, most of its funds delivered below-average returns compared with the sectors they are in.

So what has gone wrong? Jeff points to M&G's devotion to "value investment", where its fund managers have concentrated on buying shares in small to mid-sized companies at the expense of larger blue-chip stocks. As we know, it is the top 100 companies that have shown by far the strongest share performance in the past few years.

This approach is branded by Jeff as "dogmatic, arrogant, intransigent and inflexible". He notes that M&G is at last trying to alter its investment strategy but, after polling a cross-section of independent financial advisers, he argues investors should stay clear of its funds for the time being.

None of this, though well-argued, is particularly new. Indeed, the low influx of savers' money into M&G in the past 12 months suggests that they have been voting with their feet for some time.

The question people like me will be asking is whether, if we are already invested in M&G, we should be switching out of its funds altogether.

Here the answer is more complicated. While some of M&G's funds have no initial charges, others levy a sliding scale of redemption penalties should you pull out within the first five years. Moreover, reinvesting elsewhere will usually lead to more up-front fees.

In addition, depending on when you invested in M&G's funds, you will have been sitting on quite decent returns. Over five years, for example, the Recovery unit trust is in the top 50 per cent of funds in its sector.

M&G, meanwhile, argues that its strategy will pay off this year as undervalued small company shares finally hit their stride. Indeed, in the six months to January this year, the Recovery Fund was ranked 32nd out of 160 in the UK growth sector.

So the jury is still out on M&G. But unless it delivers on its promises in the next six to nine months, it may be time to pull out.

By the way, Bloomberg Money is offering free copies of its first issue, priced at pounds 2.95, to the first 250 readers of The Independent who call or write in. The number is 0171-330 7979. Or write to 7 Air Street, London, W1R 5RJ.

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