Axa Investment Managers (Axa IM) has launched a debt fund that will focus on investing in emerging market bonds issued in euros while “adhering” to Axa’s ESG standards.
The WF Emerging Markets Euro Denominated Bonds fund aims to provide an alternative to investors looking to increase their emerging market debt exposure while removing the complication of US dollar hedging costs.
The fund will avoid distressed debt names, while focussing on debt issued by emerging market countries where the local currency is either pegged to the euro or revenues are received in euros, thus encouraging the issue of euro denominated debt.
It will invest in securities rated B- or higher, with a focus on sovereigns and corporate issuers.
The fund’s manager, Mikhail Volodchenko, said: “While hedging costs have fallen, we believe they are likely to rise in the future, and this strategy removes the complication of this effect.
“There has clearly been a significant amount of volatility in capital markets this year as a result of the economic impact of coronavirus, and emerging markets have not been exempt from this.
“However, with unprecedented support from developed central banks and governments, we believe this has led to attractive opportunities for those sovereign and corporate issuers best placed to weather the storm and bridge the gap to the other side of the pandemic, and we believe this fund has the flexibility to take advantage of them.”
The fund will be available to professional and retail investors in the UK, France, Austria, Belgium, Denmark, Finland, Italy, the Netherlands, Norway, Spain and Sweden.
