Axa Investment Managers (Axa IM) has launched a fund that invests in short duration bonds to fight off the effects of inflation.
The Axa World Funds Global Inflation Short Duration Bonds fund will be managed by Jonathan Baltora and is based on an existing €3.1 billion flagship inflation bond fund.
Investing in bonds with a duration range of up to five years, the fund seeks to maintain a high correlation of total return to realised inflation.
Baltora said short duration inflation-linked bonds can help investors fight inflation with lower interest rate risk than longer duration bonds, as they tend to closely track inflation.
“A key feature of the inflation linked bonds market is the inflation paid out to investors is the same for every bond across the curve; investors looking for explicit inflation protection need not be exposed to all maturities,” he added.
Over five years to the end of May 2016, the Luxembourg-domiciled flagship AXA WF Global Inflation Bonds fund has returned 22.42% against an IA Global Inflation Linked sector return of 14.93%, according to the firm.
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