Axa IM said the fund offers ‘flexible exposure’ to the US high yield market by investing in cash bonds along with an overlay of credit default swaps, which it says will enhance potential returns versus traditional US high yield funds.
The fund aims to target companies with ‘solid business models and improving credit fundamentals’, and will typically have a lower number of positions than Axa’s traditional US Core High Yield strategy, reflecting an investment in its credit analysts’ highest conviction opinions.
Axa said the relatively low number of positions should allow the fund to better react to market moves.
Notably, the fund has the ability to write single name CDS protection to add leverage while expressing positive views on individual issuers.
The Luxembourg-domiciled SICAV was incepted in January 2014 with $100m. It has both retail and institutional share classes and Axa IM is considering registration across a number of countries globally.
The new fund sits alongside Axa’s existing US Short Duration and US Core High Yield funds.
“We believe that the recent volatility in the market provides opportunities to invest in US high yield,” said Whitbeck. “The fund’s flexible approach will allow us to optimise our high yield exposure in order to reflect our top down view.
“This new strategy builds upon our existing US Core High Yield strategy but targets higher return potential in both neutral and bull markets via the CDS overlay, but with volatility closer to that of the broad high yield market,” he added.
