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AXA WF Global Buy and Maintain Credit
Last NAV 129.2300 USD as of 06/04/20
The Sub-Fund seeks to achieve a mix of income and capital growth measured in USD by investing mainly in investment grade corporate debt securities from issuers located worldwide, over a medium term period.
Synthetic Risk & Reward Information scale
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?
Fund manager comment : 31/01/20
Key Points Credit indices ended the year on a positive note with the strongest month of rally for the fourth quarter of 2019. In December, the Ice BofAML Global Credit Index (G0BC) tightened by 15 basis points (bps) to close at 100bps of asset swap. North American credit indices outperformed European ones in the rally. We ended the year with a total performance hedged back to euro at 9.26%, with last quarter being the weakest at +0.12% due to the rates component dragging down performance. Financials and cyclicals outperformed the defensive sectors. Energy and financial subordinated debts behave particularly well with over 20bps of tightening and were the best-performing sectors. Global credit market posted a performance hedged back to US dollar of +0.82 in Q4 (as measured by the BofAML Global Corporate Index). AXA WF Global Buy and Maintain Credit (“the Fund”) recorded a return of + 0.76%. Market Snapshot World stocks had a strong final quarter of the year. The announcement of a ‘Phase One’ trade deal between the US and China and a reduction in uncertainty regarding Brexit helped push MSCI World Index of global equities to a record high. US stocks were bolstered by strong domestic economic data, encouraging corporate results, dovish monetary policy by the US Federal Reserve (Fed) and the easing China tensions; all three major US indices registered all-time highs during the period. European shares also gained, with the pan-European Stoxx 600 Index peaking in December, as an apparent resolution to the US-China trade conflict drove sentiment. UK shares were buoyed by trade optimism and as the Conservative Party won the general election in December, which paves the way for the UK to leave the European Union (EU) by 31 January. Yields on US 10-year treasury bonds (which move inversely to price) rose from 1.66% to 1.92% over the fourth quarter. The US-China trade dispute caused bouts of market anxiety. However, in December, the two countries agreed the terms of the first phase of their trade deal. Bond markets, however, were largely unmoved by the news that the House of Representatives had voted to impeach President Trump. In peripheral Europe, political events caused ripples in bond markets. Italian yields spiked during the quarter; although the country is governed by a coalition between the Democratic and Five Star parties, investors are wary of political instability. In Spain, the fourth general election in four years resulted in strong gains for the extreme-right Vox party. Following the result, Pedro Sanchez, the acting prime minister and leader of the Socialist party, agreed to work with the Podemos party Investment grade spreads tightened as the US and China made tangible progress in resolving their trade dispute, agreeing the first phase of their new deal. In terms of new issuance, an offering from AbbVie set a record as the biggest US investment grade deal this year. The bonds were issued across 10 tranches totalling $30 billion. The proceeds of the deal are earmarked for AbbVie’s planned acquisition of Allergan. However, it’s thought that the trend of corporate issuance for M&A purposes is diminishing. Fund Performance Positive sentiment, related to Brexit and US-China trade war, coupled to the usual end of year illiquidity pushed credit spread tighter during the quarter. Nevertheless, the strong tightening of credit spreads didn’t offset the rise in risk free rate. As such total return was negative for the quarter. In this context, due to its more conservative positioning, the portfolio slightly lagged its investment universe. Fund Activity Our trading activity over the quarter has been driven by flows and portfolio maintenance. We kept our defensive bias, with most of our investments on the defensive and financials sectors. Except during December where supply was limited, we otherwise benefited from a very active primary market during the quarter and most of our purchases was made through new issues, this enabled us to limit the transaction cost and slightly increase the diversification. Outlook Recession risks have fallen back, and monetary policy has been reset to be much more supportive for both economic growth and financial markets. However, there remain substantial risks as we have already seen with events in the Middle East at the beginning of the year. Interestingly market movements so far have been limited and the backwardation of the oil curve shows that fundamentals do not really support a sustained rise in oil prices sufficient to tip the global economy into recession. However, the situation will keep investors nervous given that an escalation of tensions could generate a sharp risk-off move in markets, even if it proves to be short lived. Nevertheless, the base case continues to be for some near-term strengthening of economic data driven by a bounce in industrial activity. We would expect to see some of the hesitancy in corporate spending to give way to modestly more capital spending, particularly if more progress is made between the US and China on trade. This would also be of benefit to the more globally exposed countries in Europe like Italy and Germany. Fiscal policy is also likely to continue to be on a modestly expansionary trend in some economies (the UK for example). Beyond the impact of the safe-haven buying of core government bonds in the immediate aftermath of the Iran attack, our cyclical view is for slightly higher bond yields in the first half of 2020. Credit spreads are tight, but fundamentals and technical factors could push spreads a little lower. However, with central banks providing lots of liquidity and staying on hold, there is little reason for bond yields to move substantially higher. Given current spreads, credit should provide positive excess returns.
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.
|Reference index||Start date||End date|
|Performance table||Net performance||Reference index||Start date||End date|
|Risk table||Fund volatility||Benchmark volatility||Tracking error||Information ratio||Sharpe ratio||Beta||Alpha|
|First NAV date||15/01/13|
|Asset class||FIXED INCOME|
|Legal authority||Commission de Surveillance du Secteur Financier|
|Fund Manager||Mathieu CRANZ|
|Co-manager||. .Whole team task|
|Investment team||MT Buy & Maintain Paris|
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. Minimum initial investment: USD 5,000,000 or the equivalent in the relevant currency of the relevant Share class. Minimum subsequent investment: USD 1,000,000 or the equivalent in the relevant currency of the relevant Share class.