Investment Strategies

Fixed Income

We cover a broad spectrum of fixed income strategies to help investors build diverse portfolios that can be more resilient to economic and market shifts.

Fixed income in numbers

€537 bn
of assets1
120+
fixed income professionals1
25 + years
experience in fixed income1

Our Approach

Fixed income can help preserve capital, generate regular income from coupon payments on fixed rate bonds, and help to offset market fluctuations over time. It can also provide diversification in a portfolio that includes other asset classes, including generally riskier ones, like equities.

Actively managed funds

Building a diversified portfolio of single fixed income securities can be time consuming and costly for an individual investor. That's why we offer mutual funds in fixed income that we actively manage. 

Weather economic ups and downs

We've managed fixed income portfolios through economic ups and downs for decades. Our global team of local experts draw on our robust research capabilities and have extensive experience in monitoring risk. 

Multi-tiered risk approach

We understand credit, interest rate, inflation, liquidity, and market risks, and we manage against them with the aim of delivering favourable results over the long term. 

Backed by research

We use global macroeconomic insights, bottom-up company credit analysis, and an assessment of ESG factors to navigate the increasingly complex fixed income market. 

Global scale and experience

We have 120+ experts across three continents and 20+ years experience in fixed income investing.1

  • Source: AXA IM as at 30.06.21

Full spectrum investing

We offer a comprehensive range of strategies spanning the whole spectrum of the fixed income universe across developed and emerging markets, government and corporate debt, and investment grade and high yield markets. 

We actively manage investments for our clients every day, with the aim of delivering positive total return or outperforming market benchmarks.

Setting a benchmark can help individual investors understand the specific types of investments a strategy will make and provide a means of measuring its performance versus the wider market.

While benchmarks can provide a good indicator of the sectors, regions, or credit ratings included in the portfolio, an active approach doesn't simply replicate the benchmark in the portfolio. Instead, it uses the managers' knowledge and skill to build a selective portfolio of the most attractive opportunities within the benchmark, with the aim of adding value on top of the benchmark’s performance – referred to as an 'active return'.

Our strategies aim to outperform their benchmarks within a 'tracking error budget'. This means the level of active return we aim for is relative to a target level of active risk.

For strategies which are not measured against a benchmark the focus is on delivering attractive risk-adjusted returns by using greater flexibility to navigate market movements without reference to an index. 

Flexible

We offer investors the flexibility to capitalise on opportunities across the fixed income spectrum.

Our active flexible fixed income strategies have the freedom to respond to market environments, rather than following a benchmark. This allows us to put the focus on achieving a return target for a given level of risk.

Flexible bonds

Flexible bond strategies aim to seek out opportunities for both income and growth across a broad range of fixed income securities, while balancing the risks of different assets. 

Why flexible bonds?

Fixed income comprises a variety of sub-asset classes, and different bonds can have different performance and risk drivers. The performance of each sub-asset class is correlated to a different part of the economic cycle, which is in constant motion. We think this is a strong case for building portfolios that can adapt.  

An active, unconstrained approach can have the flexibility to use dynamic asset allocation, and effective diversification, to try to capture different performance drivers at the right time, while managing the associated risks. 

Our strategy

We aim to deliver portfolio performance with a low correlation to both interest rate and credit risk. We avoid benchmark allocations – instead, we invest across defined risk buckets and seek returns from a diverse set of fixed income strategies. 

FIXED INCOME

What is unconstrained fixed income?

Find out more about global strategic bonds and total return investing

Learn more
Sustainable strategies are those where investment decisions are guided by environmental, social and governance (ESG) themes. They aim to promote environmental sustainability and minimise the negative impact of issues such as climate change, while also potentially delivering financial returns.

Why sustainable investing? 
At AXA IM, we believe investing responsibly goes hand-in-hand with our fiduciary duty to clients. We strive to safeguard the long-term interests of our clients by guiding companies towards more responsible behaviour and investing in those that meet the conditions for sustainable growth.

We believe a focus on sustainable investing helps us make better investment decisions and can be a means by which we can help accelerate the transition to a more sustainable world. Companies are having to adapt to their customers’ higher expectations around sustainable practices, which is backed by governmental and regulatory support to incorporate sustainability measures into company information. In addition, industry research and analysis are increasingly suggesting that incorporating ESG factors into investment processes can identify risks while potentially generating excess returns.

Our strategy 
Our Sustainable strategies embed sustainability factors into portfolio construction and use responsible investing analysis to refine and enhance the asset class universe. Strategies might follow a best-in-class policy which removes low-ESG-scoring companies, or adjust portfolios to target a specific factor such as a carbon footprint.

High Yield

High yield bonds can offer higher long-term returns than other types of bonds. While considered at the higher risk end of fixed income, they can provide a useful contribution to a well-diversified portfolio.

Why high yield bonds? 
High yield bonds can produce significantly higher income compared to, say, investment grade bonds, and can help diversify a fixed income portfolio. They can produce equity-like returns and typically have shorter maturities (the time until the principal investment is repaid) than many investment grade bonds. They are more exposed to credit risk, which is the risk that the issuer will be unable to repay the loan, but they tend to be less exposed to interest rate risk. 

Our strategy 
We use bottom-up research to identify companies with improving credit trends, while our macroeconomic insights seek to identify risks and opportunities associated with the overall economy and market. Using this two-pronged approach, we aim to minimise default risk and manage volatility through active management, while pursuing high yield opportunities. 

Emerging markets

Emerging markets & Asia

Emerging markets are quickly becoming drivers of global growth and are home to some of the world's most innovative companies.

Why emerging markets? 
While the risks involved with investing in emerging markets can be higher, so are the yields on offer. This is particularly attractive in the current environment of very depressed yields. 

Our strategy 
Our emerging markets team focuses on income generation, while attempting to mitigate risk, and aim for attractive returns. They're located throughout the world’s major markets and take a conviction-based, long-term investment approach. 

Developing customised solutions involves partnering with clients to design, optimise and manage bespoke solutions, tailored to their needs.

In the late 2000s, Liability Driven Investment (LDI) mandates became a popular solution for institutional investors. LDI, at its most simple level, is about hedging assets and liabilities, and controlling the volatility of the portfolio on a day to day basis.

More recently, Cashflow Driven Investment (CDI) mandates have risen to prominence as a complement to LDI solutions by meeting institutions’ cashflow requirements. CDI is a more forward-looking and long-term approach that seeks to help clients increase their ability to meet their future cashflow requirements and funding objectives.

Why solutions?
Effectively managing cashflow challenges amid ever-decreasing liquidity in credit markets and rising transaction costs is becoming increasingly vital for many institutional investors, leading them to explore the potential benefits of adopting CDI solutions.

A successful CDI strategy is one that aims to reliably generate predictable cashflows through selecting assets like high quality corporate bonds to provide stable, contractual income in-line with the expected cashflow requirements.

Our strategy
Our solutions team works in partnership with our clients to provide strategic advice, portfolio management expertise and cost-effective implementation. At the core of our cashflow driven investing solutions is our long-term Buy and Maintain credit approach, designed to increase the predictability of client cashflows.

Risks

No assurance can be given that our fixed income strategies will be successful. Investors can lose some or all of their capital invested. Our strategies are subject to risks including, but not limited to: liquidity risk, credit risk, interest rate risk, counterparty risk, legal risk, valuation risk, operational risk, emerging markets risk; global investments risk; and risks related to the underlying assets.

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    Disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

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