You are currently using Internet Explorer. This website is optimised for Google Chrome, Mozilla Firefox and Microsoft Edge. You can download Chrome here, Firefox here or Microsoft Edge here.
A conservatively managed strategic bond fund that focuses on short-dated, final maturity date (or call date) bonds of less than five years. The fund is invested flexibly in short-dated opportunities from across the global fixed income spectrum. Within its sector, the fund features in our 'Diversified, Global Short Duration' category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 3. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 3 means the fund’s historic volatility is between 2% and 5%.
The fund resides in the IA Sterling Strategic Bond sector but invests globally in short-dated bonds that have a final maturity date (call date) of less than five years. As such, the fund is typically less volatile than the sector in which it resides, as well as mainstream global investment grade bond indices. This is reflected in the low SRRI score of 3. Different share classes could have different SRRI scores.
Lead manager, Nicolas Trindade, joined AXA Investment Managers (AXA IM) in 2006 and is a senior portfolio manager at the firm. He has managed the fund since its launch in 2017 and is also the lead manager of the Sterling Credit Short Duration Bond fund. Mr Trindade and the fund’s deputy manager, Nick Hayes, are members of the firm’s London-based Active Sterling Fixed Income team. They are supported by AXA IM’s local short duration managers, who provide insight and best ideas. The US investment grade portion is managed as a carve-out by Frank Olszewski, Head of Investment Grade Active US Credit, in consultation with Mr Trindade.
The team believes that the key to generating superior long-term returns in fixed income is to compound current income and avoid principal loss. They seek to do this through active management based upon fundamental credit analysis and macro-economic research. For the short duration credit strategies, there is a particular focus upon capital preservation, reducing the fund’s sensitivity to changes in interest rates and being mindful of portfolio volatility and trading costs.
The fund can invest in bonds issued by companies and governments globally where the period for full repayment is expected to be less than five years. The investable universe encompasses cash, government bonds, investment grade credit, high yield credit and hard currency emerging market bonds. Typically, around 20% of the fund matures each year, providing both liquidity and a natural hedge against rising bond yields. The fund will never hold more than 20% in inflation-linked bonds, or more than 60% in high yield and emerging markets debt combined. Currency forwards are used to hedge currency exposure back to sterling. Derivatives are used for hedging purposes as well as for the purpose of additional alpha generation, particularly in the context of tactical duration exposure.
The process begins with an assessment of the macro environment. This takes in the views of the in-house strategy team and fund managers, together with external inputs from investment banks and ratings agencies. These views are consolidated into a macro framework, which is used by the specialised Alpha groups (small sub-teams of individuals split by expertise) as a foundation from which to build their views. The Alpha groups define overall market expectations and active strategies using their proprietary “MVST” (macro, valuation, sentiment and technicals) analysis. The amalgamation of their views forms the top-down strategy that determines the direction and shape of the funds for the next three months. From the bottom-up perspective, a global team of credit analysts provides fundamental opinions on the full credit universe, identifying issuers with solid fundamentals and financial stability.
The split between the different fixed income asset classes is determined by the portfolio manager. While there is a notional neutral allocation of 10% in cash/sovereign bonds, 60% in investment grade bonds and 30% in high yield and emerging market bonds, within certain guidelines, he has full flexibility to invest where he perceives the greatest value.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above, as well as a link to the ASSET MANAGER FACTSHEET.
At The Adviser Centre, our primary aim is to support financial professionals in their fund selection and suitability work through independently-minded research, borne of decades of industry experience. Our process is framed by the fundamental concepts of “quality”, “value” and “utility”, through which we answer the key questions of why to invest in a fund, how it is likely to behave and how it can be deployed.
The Adviser Centre team members are some of the most experienced in the fund research industry. We can always look forward to robust and constructive discussions and we have great respect for their views and perspectives, which, given the breadth of their fund and market knowledge, come from an extremely well-informed position.
We have known and worked with the team for several years and we value their experience and the insights they provide to our own investment process. The service differentiates itself by its more focused nature and the information on their factsheets is useful in emphasising a fund’s key mandate, exposure and style biases, helping to explain the risk/return journey that our customers can expect.
© The Adviser Centre | All Rights Reserved. The Adviser Centre is a trading name of Embark Investments Limited and is not authorised to carry out regulated activities. Embark Investments Limited is a company registered in England (No. 03383730) and a wholly owned subsidiary of Embark Group Limited, with its registered office at 33 Old Broad Street, London, EC2N 1HZ. Embark Investments Limited is authorised and regulated by the Financial Conduct Authority (Registration No. 628981). This website is provided by The Adviser Centre and is a service for financial professionals only. Information on this website, including data and information from asset managers and third party sources, is deemed to be correct at the time of publication but The Adviser Centre takes no responsibility for its accuracy. Opinions are stated honestly and with careful consideration but they can change at any time and should not be solely relied upon. Information featured on the website does not constitute financial or investment advice.
Your use of this website is subject to the terms of use set out in the website. By continuing to use our website we will assume that you are happy to receive non-privacy intrusive cookies. Please be aware that if you disable cookies some functionality on the site will not work. Read our cookies policy to find out more about our cookie use and how to disable cookies.
Alternatively, if you are not a financial professional and are seeking financial advice, you may wish to visit unbiased.co.uk to search for a financial adviser.