Axa Investment Managers (Axa IM) has launched a “smart beta” credit fund that emphasises low portfolio turnover.
The Axa WF Euro SmartBeta Credit Bonds Fund was launched in response to client demand for a euro-denominated smart beta strategy, Axa IM says.
This fund has been designed specifically for institutional investors seeking “low-cost, fundamentally driven exposure to European credit markets, without the drawbacks of index tracking strategies while taking into account the current low yield and liquidity in credit markets”.
“Smart” portfolio construction ensures that 8-10% of the portfolio matures each year. This will also provide flexibility to capture market opportunities and refresh the positioning of the fund without having to incur high transactions costs in today’s environment of poor market liquidity.
The fund is managed by Damien Maisonniac, who says: “Unlike index tracking, smart beta takes a pragmatic, conservative approach to portfolio construction, resulting in a fund which we believe is better protected against systemic and issuer-specific risks. We do not allocate to the most debt-burdened entities nor automatically sell when a bond is downgraded to sub-investment grade. Instead we seek to minimise over-concentration in issuers or sectors in a pragmatic or smart way.”
The fund follows a ‘buy and maintain’ approach with very low turnover. It is designed to preserve capital by avoiding credit-related losses, minimising transaction costs and optimising the yield captured through use of Axa Investment Managers’ credit research capabilities.
The fund invests predominantly in euro-denominated investment grade corporate bonds with high levels of issuer, sector and geographic diversification.
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