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AXA IM launches the AXA WF Euro Inflation Plus fund aiming to outperform Euro area inflation

  • 20 October 2021

  • AXA Investment Managers (AXA IM) has launched the AXA WF Euro Inflation Plus fund that aims to outperform the Euro area inflation, net of ongoing charges, using flexible allocation between nominal and inflation linked bonds, and active breakeven management.

  • The new fund is managed by Jonathan Baltora, Head Of Sovereign, Inflation And FX, and the wider Inflation Team at AXA IM.

AXA Investment Managers (AXA IM) announces the launch of the the AXA WF Euro Inflation Plus fund that aims to outperform the Euro area inflation, net of ongoing charges. The fund manager will use a fexible allocation between nominal and inflation linked bonds and active breakeven management. The fund is actively managed and doesn’t have a traditional bond benchmark, instead its performance will be measured against the Harmonised Indices of Consumer Prices Excluding Tobacco as published by Eurostat.

The Sub-Fund of the Luxembourg-domiciled SICAV aims to reach its performance objective of delivering performance in both bull and bear markets. In the event of accelerated/increased inflation, the fund manager might opt for short maturities inflation linked bonds as well as long inflation breakevens1 strategies. In the event of a slowdown in inflation, the strategy could invest up to 100% of its assets in fixed rate bonds and could also go short on inflation breakevens.

The fund can invest in sovereign nominal bonds as well as corporate bonds (with a limit of 20% of the Net Asset Value (NAV)). It can also leverage opportunities in emerging markets provided that these are OECD members. The fund will only invest in Investment Grade2  fixed income assets. Exposure to those markets can be hedged or not against inflation by using zero coupon inflation swaps3 at the management team’s discretion

The investment strategy is based on three pillars:

  • A discretionary approach to inflation strategies,

  • A flexible allocation between nominal and linkers,

  • A broader asset allocation and income generation: exploiting opportunities in other investment grade fixed income markets. 

The Fund has been categorised as an Article 8 product according to the EU Sustainable Finance Disclosure Regulation (SFDR). On top of AXA IM’s exclusion policies4 , the Fund will aim to outperform the ESG score5  of a parallel comparison portfolio constituted of 80% Bloomberg Barclays World Govt Inflation-Linked All Maturities 1-5yr and 20% ICE BofA 1-5 Year Global Corporate Index.

Commenting on the launch, Jonathan Baltora, Head Of Sovereign, Inflation and FX and manager of the AXA WF Euro Inflation Plus fund said: “We believe there is a high probability that the Euro area inflation will remain well above the level of nominal interest rates. As such, it becomes increasingly difficult for European investors to find assets that yield at least the inflation rate while remaining in the Investment Grade universe. Therefore, a product that aims to outperform the Euro area inflation can be a particularly attractive value proposition.”

“Additionally, the fact that the Fund can short inflation breakevens and target a higher ESG rating than investment universe is a true innovation for inflation strategies currently being offered in the market”.

The fund is registered and available to professional and retail investors in Austria, Belgium, Denmark, Finland, France, Germany, Italy (restricted scheme only), Liechtenstein, the Netherlands, Norway, Portugal, the United Kingdom, Spain, Sweden and Switzerland.

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The value of investments may fall as well as rise and you may not get back the full amount invested.

Risks

Counterparty Risk: Risk of bankruptcy, insolvency, or payment or delivery failure of any of the Sub-Fund's counterparties, leading to a payment or delivery default.

Risk of capital loss: The fund invests in  financial markets and uses techniques and instruments subject to variations that can lead to gains and losses.

Inflation-Linked bonds risk: Inflation-linked bonds are special types of indexed bonds that are tied to indices that are calculated based on the rates of inflation for prior periods. The value of inflation-linked bonds generally fluctuates in response to changes in real interest rates. The market for inflation-linked bonds may be less developed or liquid, and more volatile, than certain other securities markets.

Derivatives and leverage risk: These instruments are volatile and may be subject to various types of risks, including but not limited to market risk, liquidity risk, credit risk, counterparty risk, legal risk and operations risks.

Emerging markets: Some of the securities held in the concerned Sub-Fund may involve a greater degree of risk than generally associated with similar investments in major securities markets, due, in particular, to political and regulatory factors

144A securities risk: The 144A securities are traded between a limited number of QIBs, which may cause a higher price volatility and a lower asset liquidity of certain 144A securities.

Sovereign debt risk: Certain countries are especially large debtors to commercial banks and foreign governments. Investment in such debt obligations, i.e. sovereign debt, issued or guaranteed by such governments or governmental entities involves a higher degree of risk.

Sustainability risks: Given the Sub-Fund’s Investment Strategy and risk profile, the likely impact of the sustainability risks on the Sub-Fund’s returns is expected to be medium.

ESG risks: The integration of ESG and sustainability criteria into the investment process may exclude securities of certain issuers for reasons other than investment and, therefore, certain market opportunities available to funds that do not use ESG or sustainability criteria may be unavailable to the SICAV, and its performance may sometimes be better or worse than that of comparable funds that do not use ESG or sustainability criteria.

Biography 

Jonathan Baltora

Jonathan is the Head of the Sovereign, Inflation & FX team in Paris and Senior Portfolio Manager within our Fixed Income platform. He joined AXA IM in 2010 as a Portfolio Manager for European and Global Inflation-linked bonds portfolios.  In his current role, he is responsible for managing inflation linked bonds, sovereigns and FX. Prior to joining AXA IM, Jonathan worked for four years at Groupama Asset Management where he began his career as a Portfolio Manager, responsible for managing inflation-linked and aggregate portfolios.

Jonathan holds a Master’s degree in Economics as well as a Magistère in Finance, both from the University Paris I Pantheon-Sorbonne.

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    This press release should not be regarded as an offer, solicitation, invitation or recommendation to subscribe for any investment service or product and is provided for information purposes only. No financial decisions should be made on the basis of information provided.

    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.

    Before making an investment, investors should read the relevant Prospectus and the Key Investor Information Document / scheme documents, which provide full product details including investment charges and risks. The information contained herein is not a substitute for those documents or for professional external advice.

    The products or strategies discussed in this document may not be registered nor available in your jurisdiction. Please check the countries of registration with the asset manager, or on the web site https://www.axa-im.com/en/registration-map, where a fund registration map is available.  Please note that the management company reserves the right, at any time, to no longer market the product(s) mentioned in this communication in the European Union country by notification to its authority of supervision in accordance with European passport rules. In particular units of the funds may not be offered, sold or delivered to U.S. Persons within the meaning of Regulation S of the U.S. Securities Act of 1933. The tax treatment relating to the holding, acquisition or disposal of shares or units in the fund depends on each investor’s tax status or treatment and may be subject to change. Any potential investor is strongly encouraged to seek advice from its own tax advisors. In the event of dissatisfaction with the products or services, you have the right to make a complaint either with the marketer or directly with the management company (more information on our complaints policy is available in English https://www.axa-im.com/important-information/comments-and-complaints). You also have the right to take legal or extra-judicial action at any time if you reside in one of the countries of the European Union. The European online dispute resolution platform allows you to enter a complaint form (https://ec.europa.eu/consumers/odr/main/index.cfm?event=main.home.chooseLanguage) and informs you, depending on your jurisdiction, about your means of redress (https://ec.europa.eu/consumers/odr/main/?event=main.adr.show2).

    [AXA WF Euro Inflation Plus is a/are sub-fund(s) of AXA World Funds. AXA WORLD FUNDS ‘s registered office is 49, avenue J.F Kennedy L-1885 Luxembourg. The Company is registered under the number B. 63.116 at the “Registre de Commerce et des Sociétés” The Company is a Luxembourg SICAV UCITS IV approved by the CSSF and managed by AXA Funds Management, a société anonyme organized under the laws of Luxembourg with the Luxembourg Register Number B 32 223RC, and whose registered office is located at 49, Avenue J.F. Kennedy L-1885 Luxembourg.

    Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 22 Bishopsgate London EC2N 4BQ

    In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. 

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