AXA IM launches onshore Global Strategic Bond fund for UK investor

AXA Investment Managers (AXA IM) announces the launch of the AXA Global Strategic Bond fund, an onshore version of the successful global fixed income strategy it has been running for the past nine years.

The UK-domiciled fund aims to provide investors with an unconstrained, total return mandate which can invest across the multi-trillion dollar fixed income universe, mirroring the existing offshore AXA WF Global Strategic Bonds fund.

Managed by Nick Hayes, with Nicolas Trindade as deputy, the fully ESG integrated fund invests in fixed income assets with a view to finding growth opportunities which can provide an ongoing positive return for investors.

The strategy combines top down, strategic asset allocation based on the team’s global macro outlook with bottom up regional and sector-specific credit selection, utilising the wider skillset across AXA Investment Managers’ fixed income capability to provide a “best ideas” portfolio of a variety of fixed income assets.

Split into risk categories, the fund is made up of assets the team considers to be either defensive, intermediate or aggressive, offering a transparent and liquid core holding for clients looking to get ongoing, diversified exposure to fixed income assets.

Commenting on the launch, Nick Hayes, manager of the AXA Global Strategic Bond strategy, said: “The strategy delivers exposure to the global fixed income market via a flexible and transparent process and approach which adapts to the current conditions to capture returns, whilst minimising the volatility experienced by individual sub-asset classes within the wider universe. With so much uncertainty facing fixed income investors at the moment, we believe now is the optimum time to hold such a flexible strategy."

Marion Le Morhedec, Head of Active Fixed Income Europe & Asia, added: “The last decade has presented numerous challenges for fixed income investors as extraordinary monetary policy has become the norm, and 2020 has continued that trend. Despite this backdrop, the strategy has delivered consistent positive returns through its total return approach, and we are pleased to launch an onshore fund for UK investors seeking broad exposure to fixed income markets."

Risks: 

Investment involves risks, including the loss of capital

Counterparty Risk: failure by any counterparty to a transaction (e.g. derivatives) with the Fund to meet its obligations may adversely affect the value of the Fund. The Fund may receive assets from the counterparty to protect against any such adverse effect but there is a risk that the value of such assets at the time of the failure would be insufficient to cover the loss to the Fund.

Derivatives: derivatives can be more volatile than the underlying asset and may result in greater fluctuations to the Fund's value. In the case of derivatives not traded on an exchange they may be subject to additional counterparty and liquidity risk.

Geopolitical Risk: investments issued or traded on markets in different countries may involve the application of different standards and rules (including local tax policies and restrictions on investments and movement of currency), which may be subject to change. The Fund's value may therefore be impacted by those standards/rules (and any changes to them) as well as the political and economic circumstances of the country/region in which the Fund is invested.

Interest Rate Risk: fluctuations in interest rates will change the value of bonds, impacting the value of the Fund. Generally, when interest rates rise, the value of the bonds fall and vice versa. The valuation of bonds will also change according to market perceptions of future movements in interest rates.

Securitised assets or CDO assets risk: Securitised assets or CDO assets (CLO, ABS, RMBS, CMBS, CDO, etc.) are subject to credit, liquidity, market value, interest rate and certain other risks. Such financial instruments require complex legal and financial structuring and any related investment risk is heavily correlated with the quality of underlying assets which may be of various types (leveraged loans, bank loans, bank debt, debt securities, etc.), economic sectors and geographical zones.

Emerging Market Risks: emerging markets or less developed countries may face more political, economic or structural challenges than developed countries. As a result, investments in such countries may cause greater fluctuations in the Fund's value than investments in more developed countries.

Liquidity Risk: some investments may trade infrequently and in small volumes. As a result, the fund manager may not be able to sell at a preferred time or volume or at a price close to the last quoted valuation. The fund manager may be forced to sell a number of such investments as a result of a large redemption of shares in the Fund. Depending on market conditions, this could lead to a significant drop in the Fund's value and in extreme circumstances lead the Fund to be unable to meet its redemptions.

Credit Risk: the risk that an issuer of bonds will default on its obligations to pay income or repay capital, resulting in a decrease in Fund value. The value of a bond (and, subsequently, the Fund) is also affected by changes in market perceptions of the risk of future default. The risk of default for high yield bonds may be greater.

Risks linked to investment in sovereign debt: Where bonds are issued by countries and governments (sovereign debt), the governmental entity that controls the repayment of sovereign debt may not be able or willing to repay the capital and/or interest when due in accordance with the terms of such debt. In the event of a default of the sovereign issuer, a Fund may suffer significant loss.

High yield bonds risk: These bonds are issued by companies or governments with lower credit ratings and as such are at greater risk of default or rating downgrades than investment grade bonds. Contingent convertible bonds (“CoCos”): these financial instruments become loss absorbing upon certain triggering events, which could cause the permanent write-down to zero of principal investment and/or accrued interest, or a conversion to equity that may coincide with the share price of the underlying equity being low. It is possible in certain circumstances for interest payments on certain CoCos to be cancelled in full or in part by the issuer, without prior notice to bondholders.

Further explanation of the risks associated with an investment in this Fund can be found in the prospectus.