AXA WF Emerging Markets Short Duration Bonds

ISIN LU0800597873

Last NAV 125.6500 USD as of 17/10/19

Why this fund

Access the growth potential of emerging markets through diversified exposure to short term sovereign and corporate credit, with a focus on stable income generation and low volatility. The Fund focuses on securities with short duration – three years or less – issued in the emerging market universe. The strategic portfolio allocation aims to achieve performance by investing mainly into hard currencies but has the leeway to tactically allocate to local currencies.

Reasons to invest:

  1. An attractive risk-adjusted return profile thanks to an active conviction-based approach that focuses on total return whilst paying close attention to the liquidity and volatility of the underlying assets
  2. A focus on securities with duration of three years or less, aiming for stable income generation and low volatility
  3. Should benefit from a high carry due to emerging market currencies with the added feature of exposure to the diversity of the emerging market credit universe.


The AXA WF Emerging Market Short Duration Bonds has $1.35bn of assets under management*; the Fund is managed by a highly-experienced team of investment professionals.

AXA Investment Managers offers a wealth of experience built over various market and economic cycles, with more than 15 years' experience managing emerging market fixed income and over 10 years' managing short duration bond strategies.

Other short duration strategies AXA IM offer include AXA Sterling Credit Short Duration Bond Fund and the AXA US Short Duration High Yield Fund.

Key figures

  • $1.2 billion

    Over $1.2 billion assets under management

  • 100 - 120 issuers

    Typically 100 - 120 issuers split across sectors and countries

  • 2012

    Fund managed by Sailesh Lad since 2012

Fund facts:

  • Launch Date: 30/04/2010
  • Sector: US high yield
  • Fund Manager: Carl Whitbeck
  • Pay Dates: Last day of Feb, 31 Aug

Overview

Investment objectives

The Sub-Fund's investment objective is to seek performance, in USD, by investing mainly in short duration debt securities issued in the emerging debt universe over a medium term period.

Risk

Synthetic Risk & Reward Information scale

1 2 SRRI Value 3 4 5 6 7

The risk category is calculated using historical performance data and may not be a reliable indicator of the Sub-Fund's future risk profile. The risk category shown is not guaranteed and may shift over time. The lowest category does not mean risk free.

Why is this Fund in this category?

The capital of the Sub-Fund is not guaranteed. The Sub-Fund is invested in financial markets and uses techniques and instruments which are subject to some levels of variation, which may result in gains or losses.

Additional risks

Credit Risk: Risk that issuers of debt securities held in the Sub-Fund may default on their obligations or have their credit rating downgraded, resulting in a decrease in the Net Asset Value. Liquidity Risk: risk of low liquidity level in certain market conditions that might lead the Sub-Fund to face difficulties valuing, purchasing or selling all/part of its assets and resulting in potential impact on its net asset value. Counterparty Risk: Risk of bankruptcy, insolvency, or payment or delivery failure of any of the Sub-Fund's counterparties, leading to a payment or delivery default. Impact of any techniques such as derivatives: Certain management strategies involve specific risks, such as liquidity risk, credit risk, counterparty risk, legal risk, valuation risk, operational risk and risks related to the underlying assets. The use of such strategies may also involve leverage, which may increase the effect of market movements on the Sub-Fund and may result in significant risk of losses. Geopolitical Risk: investments in securities issued or listed in different countries may imply the application of different standards and regulations. Investments may be affected by movements of foreign exchange rates, changes in laws or restrictions applicable to such investments, changes in exchange control regulations or price volatility.

Investment horizon

This Sub-Fund may not be suitable for investors who plan to withdraw their contribution within 3 years.

Fund manager comment : 30/09/19

Key points • As communicated to the markets, developed central banks continued easing their policies • The AXA WF Emerging Markets Short Duration Bond Fund (‘The Fund’) returned +0.75%. • The Fund adjusted holdings via both the primary and secondary markets. • Asset class inflows picked up again, and the 2019 year-to-date figure stands at $56 billion. Market snapshot As communicated to the markets, developed central banks continued easing their policies with the US Federal Reserve (Fed), cutting rates by 25 basis points (bps) and the European Central Bank (ECB) cutting rates further into negative territory by 10bps as well as re-starting its quantitative easing (QE) programme. US President Donald Trump said he would postpone the additional 5% increase in trade tariffs on Chinese imports due to start on 1 October as a gesture of goodwill. China is set to hold further talks with the US at the start of October. Drone attacks on Saudi Oil installations saw Saudi oil supply being cut by half, causing a short surge in oil prices. The benchmark JP Morgan Hard Currency Sovereign Index posted a return of -0.46%, while the JP Morgan Hard Currency Corporate Index returned +0.63%. Asset class inflows picked up during the month, and the 2019 year-to-date figure stands at $56 billion. In CEEMEA, Turkey continued easing monetary policy by cutting interest rates by 325bps. Both Ukraine and Russia cut rates as markets expected with room for further cuts. South Africa left rates unchanged and Kazakhstan surprised markets hiking rates to fight the recent surge in inflation. S&P upgraded Ukraine to B with a stable outlook after the Fitch upgrade and Fitch upgraded Serbia to BB+ but downgraded Saudi Arabia to A. Argentina took centre stage in Latin America again with the central bank re-introducing capital controls. Opposition presidential candidate Alberto Fernandez said that Argentina was in a “virtual, hidden default” and that if was to win the presidential elections in October that the country would honour its debts. Fitch upgraded Argentina to CC from RD. Chile, Brazil and Mexico all cut rates as expected, with the door left open for more cuts. Peru left rates unchanged but said rate cuts were possible further down the road. Fitch upgraded Peru’s ratings to BBB+. In Asia, China announced RRR cuts to help support the economy and said they would take additional measures to ease the trade war impact as data softens. Fitch downgraded Hong Kong to AA with a negative outlook after over three months of demonstrations on the streets of Hong Kong. Fund activity The Fund was active in September where we reduced some low beta sovereign holdings, participated in a new issue in Nigeria as well switched further up the curve in Egypt and Ecuador. We maintained our investments in hard currency bonds and are unlikely to add any FX risk. Fund performance The Fund returned +0.75% in September, with all parts of the portfolio contributing to performance. Outlook There has been a marked increase in the expectation of the policy actions by developed central banks leading to what can be best described as a hunt for yield. However, expectations of a resolution to current trade tensions still look a long distance away are starting to weigh on emerging markets coupled with idiosyncratic stories. We remain cognisant of macro headlines and try to remain disciplined in the names in which we invest. We believe that differentiation and credit fundamentals remain crucial to stock selection. Risk factors The Fund is subject to risks associated with all fixed income securities, including but not limited to interest rate risk and credit risk. The Fund may be exposed to specific risks, such as derivatives risk and leverage, risk of global investments, risk linked to high yield debt securities and risk linked to investments in emerging markets. Investors should refer to the Fund Prospectus for a detailed description of risk considerations.

Performance

Any performance shown is net of the ongoing charge for the share class selected with income reinvested . Past performance is not a guide to future performance. The value of investments can fall as well as rise and you may get back less than invested. The fund can use derivatives for investment purposes.  These instruments may cause periods of high volatility in the price of the shares of the fund.

Benchmark

Performance indicator Start date End date
- - -

Performance table

End date

Performance table Net performance Performance indicator  Start date End date
- - - - -
1M - - - -
QTD - - - -
3M - - - -
6M - - - -
YTD - - - -
1Y - - - -
2Y - - - -
3Y - - - -
4Y - - - -
5Y - - - -
8Y - - - -
10Y - - - -
Since launch - - - -
Y-1 - - - -
Y-2 - - - -
Y-3 - - - -
Y-4 - - - -
Y-5 - - - -

Risk table

End date

Risk table Fund volatility Benchmark volatility Tracking error Information ratio Sharpe ratio Beta Alpha
1M - - - - - - -
QTD - - - - - - -
3M - - - - - - -
6M - - - - - - -
YTD - - - - - - -
1Y - - - - - - -
3Y - - - - - - -
5Y - - - - - - -
8Y - - - - - - -
10Y - - - - - - -
Since launch - - - - - - -

Price table

Start date

End date

Price Date Portfolio AUM
- - -

NAV

First NAV date 28/12/12

Administration

Distribution country

Distribution countries
Belgium
France
Germany
Luxembourg
Netherlands
Spain
Switzerland
United Kingdom

Fees

Ongoing Charges 1.26%

Fund facts

Currency USD
Start date 06/09/12
Asset class FIXED INCOME
RI fund False
Legal authority Commission de Surveillance du Secteur Financier

Portfolio management

Fund Manager Sailesh LAD
Co-manager Mikhail VOLODCHENKO
Investment team Emerging Markets

Structure

Investment area Global Emerging Markets
Legal form SICAV

Subscription and redemption

The subscription, conversion or redemption orders must be received by the Registrar and Transfer Agent on any Valuation Day no later than 3 p.m. Luxembourg time. Orders will be processed at the Net Asset Value applicable to the following Valuation Day. The investor's attention is drawn to the existence of potential additional processing time due to the possible involvement of intermediaries such as Financial Advisers or distributors. The Net Asset Value of this Sub-Fund is calculated on a daily basis.

Literature