December 1, 2020

invest to seek global return


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Investors today face two major challenges. First, returns on many assets remain low after a decade of record-low interest rates, and there is little indication that they will increase significantly in the near future. Second, the uncertainty about the global economic outlook indicates that volatility in financial markets is expected to continue.

Using an investment strategy without restrictions may be the key to breaking through in this environment. Global unrestricted fixed income funds have the flexibility to seize opportunities rather than being tied to the ups and downs of a benchmark index or a single part of the fixed income universe, such as government bonds or government debt. emerging markets. Therefore, they can focus on delivering a positive total return within reasonable time horizons and avoid the worst of the downturn by modifying portfolio allocation as markets evolve and change. However, this diversity of investment opportunities also carries potential complexity. It is very important to consider both risk and return and understand how each of the funds works and what they invest in to minimize negative surprises.

What is unrestricted fixed income?

Traditional investment in fixed income is usually oriented to a benchmark index. The goal is to add value against a chosen index, regardless of whether the index goes up or down. Portfolios of this type are typically built with reference to the index and can be limited to a specific area of ​​the fixed income universe, such as a region, a sector, a maturity or a credit quality.

An unconstrained, flexible approach is not ascribed to a benchmark, but portfolio building is generally based on growth in income and capital, without benchmarking. This offers the potential flexibility to take advantage of opportunities across the fixed income universe when they arise.

Offer from AXA Investment Managers

Nick Hayes, Head of Active Fixed Income Allocation and Total Return and fund manager AXA WF Global Strategic Bonds
Nick Hayes, Head of Active Fixed Income Allocation and Total Return and fund manager AXA WF Global Strategic Bonds

Simplicity and transparency are the main characteristics of AXA World Funds Global Strategic Bonds, which aim to provide attractive risk-adjusted total returns throughout the business cycle. The strategy does not stick to benchmark assignments. Instead, it uses its own clear framework, made up of three distinct risk components. Defensive, intermediate and aggressive. This divides the fixed income universe in a unique way depending on the relative sensitivity of the different fixed income asset classes to interest rate and credit risks. This lays the foundation for looking at the opportunity set differently.

The objective is to use the fund managers’ ability to take advantage of the best opportunities from across the global fixed income universe, thanks to the size and experience factors of the fixed income teams that AXA IM has around the world. Portfolio allocation decisions are made taking into account the context of prevailing economic conditions and valuations, in order to optimize the total return throughout the market cycle.

The fund uses a consistent, repeatable investment approach based on the global fixed income investment process. Diversification between various risk factors such as duration, inflation, spread and carry is as important to the manager as diversification in different geographical areas.

In the current environment, AXA IM believes that the opportunity to diversify across the entire fixed income universe together with the flexibility to respond to market fluctuations is a single global solution, backed by local experience, could be very compelling.

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