AXA WF Global Buy and Maintain Credit
Last NAV 132.8700 USD as of 08/10/19
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 : 31/08/19
Developed-market bond yields were generally lower over the month, reflecting investors’ concerns over a slowing pace of growth in the global economy. In the US bond market, the US yield curve flattened to levels last seen in 2007, which exacerbated these worries. Overall, the yield on the 10-year US treasury bond (which moves inversely to price) fell from 2.01% to 1.50%. In addition, the 30-year US treasury bond yield fell below 2% in a historic first. In Germany, a new 30-year bund was sold at a negative yield for the first time. The bund, maturing in 2050, was sold at a negative yield of 0.11%. Longer-dated German debt in the secondary market has also been trading at negative yields, due in part to investors’ assumption that the European Central Bank (ECB) will resume its purchase of assets, including bonds. Overall, the benchmark for the 10-year bund stayed negative for the whole month, falling from -0.44% to -0.70%. The prospect of another round of ECB asset purchases also buoyed Italian bonds – despite heightened political risk. Italy’s coalition collapsed after Matteo Salvini (leader of the League party) pulled his party out, following discord with his political partners. Despite this, Italian bonds were sought after by investors.Brexit also soured the economic backdrop, as Prime Minister Boris Johnson said that the UK would not pay the EU the ‘divorce bill’ agreed by Theresa May – a sum estimated at £39 billion – in the event of a ‘no-deal’ Brexit. In response, the European Commission remarked that reneging on the commitment would hamper future trade negotiations. The risks of a ‘no-deal’ Brexit were perceived to have risen over the month, prompting sterling to fall to a 10-year low against the euro. Overall, the benchmark 10-year gilt yield declined from 0.61% to 0.48% over the month. Recent positive sentiment reversed in August, with spreads moving wider across currencies. Global credit spreads widened by 10 basis points (bps) to reach 123bps at the end of August. The US dollar market (+22bps wider) underperformed the Sterling market (+13bps), with Euro relatively outperforming (+9bps). The Global High Yield Index was 33bps wider, with emerging markets +22bps wider.Non-financial credit underperformed financials, with higher beta and more cyclical sectors underperforming, in response to growing global growth concerns. In the US, energy and metals/mining performed the worst, with banks outperforming. In the healthcare sector, we see some M&A activities with Amgen announcing the acquisition of Otezla for $13.4 billion. It relates to an asset disposal strategy from the recently merger companies Celgene / Bristol-Myers Squibb in order to comply with anti-trust concerns raised by the FTC. Amgen also proposed to acquire Alexion Pharmaceuticals Inc for $45 billion. Amgen also recently proposed to buy Alexion Pharmaceutical Inc, a biopharma company proposing treatments for autoimmune and cardiovascular diseases, for $45.6 billion.In the financials sector, the London Stock Exchange is acquiring Refinitiv, the data platform business led by Thomson Reuters for $27 billion, and is expected to complete the deal by the end of the year.The most important corporate event of the month relates to a sell recommendation report issued by Mr Markopolos on General Electric, stating that there was an ongoing accounting fraud that would have been even bigger than the Enron case. The market reaction has been quite violent and the share price / bonds value dropped significantly. Our credit analyst went through the whole report and the conclusion is that we remain confident of GE’s ability to face potentially increased cash call related to LTC given its strong liquidity position. On the healthcare sector and the US opioids crisis, in Oklahoma, Judge Thad Balkman ruled a fine of $572 million for Johnson & Johnson (JNJ) for its misleading campaign designed to convince everyone that opioids were safe and effective. It is seen as a good news for JNJ as the financial market expected higher fine levels. The US credit investment grade supply for the month was $79.1 billion, which is the lightest August volume since 2015. This brings the total year-to-date supply to $773 billion (down 7% year-on-year). The euro investment grade credit market saw €30.5 billion of new issuances this month with most of the activity happening towards the end of the month. Indeed, while the primary market activity in the US stalled during the last week of August, euro investment grade filled the void with the largest volume of supply since June. In line with the last couple of years, sterling investment grade credit primary activity remained very muted in August, with £2.1 billion being issued. We are expecting primary activity to pick up across the board in September. Outlook: Bond market developments over the summer saw government yields reach new lows in Europe, and the US treasury yield curve became inverted. There have been - and continue to be - key drivers from the macro side with a growth slowdown now evident in many economies. However, the magnitude of yield moves has arguably exceeded what might be explained by the macro outlook alone, particularly with central banks offering little new in terms of interest rate cuts. Yield movements have also been driven by poor investor sentiment and strong technical forces. Weak sentiment has pushed investors to allocate more capital to safe haven assets as political issues like the US-China trade war and Brexit have failed to reach any resolution. On the technical side, the negative convexity faced by ALM investors like insurance companies and pension funds has driven demand for more duration, in a world where high quality long-dated paper is in relatively short supply because of past central bank interventions in the market. As we look to the final semester of the year, investors are hoping that there will be some further central bank responses to weak growth data and some resolution to outstanding geo-political issues. However, at the time of writing, this seemed unlikely; thus, further declines in bond yields cannot be ruled out. Credit markets have benefited from the decline in underlying rates. Indeed, credit markets provide some comfort to investors as the message from credit is that the risks of a full-blown recession are not as great as the movement in rates suggests. However, the macro outlook will remain gloomy for some time and investors will likely need to act cautiously, given that bond returns so far this year have been driven by extreme price movements. The risk is that these could mean revert, at least partially, at some point. Portfolio: During the month, we kept the portfolio’s spread duration unchanged. Apart the last week of august where we saw a rebound in activity, primary market was quiet and overall liquidity thin, as such our activity was limited. We kept the sector allocation broadly unchanged. Duration has been kept in line with the investment universe.
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.