AXA IM’s Ongoing Commitment to Sustainability: Global Distribution Fund renames as Global Sustainable Distribution Fund

The Multi-Asset UK-domiciled AXA IM Global Distribution Fund has been renamed as the AXA IM Global Sustainable Distribution Fund, as of 1st February 2022 in order to better reflect the fund’s environmental, social and governance (ESG) investment strategy. The fixed income sleeve of the fund is managed by Mark Healy and the equity sleeve is managed David Shaw and Jamie Forbes-Wilson.

Why is the name change needed, and why now?

We believe companies that address key sustainability-related risks, and who focus on improving their sustainability practices on key ESG issues, should deliver higher financial returns than the broader market over the long-term. Likewise, sovereign debt issuers with high ESG scores will benefit in terms of their ongoing ability to issue. An ESG-led approach is consistent with the fund’s quality focus, alongside its objective to achieve income with some medium to long-term prospects for capital growth.

AXA IM has over 20 years of responsible investment (RI) experience and has fully integrated ESG practice across our investment processes - from a firm-wide exclusion policy, through to our range of ESG integrated and ACT sustainability and impact thematic funds. We are a founding member of the Net Zero Asset Managers Initiative, and were awarded an A+ rating by the UN Principles for Responsible Investment (UNPRI).¹

We firmly believe that our position as a large investment manager comes with a responsibility to deploy as much of our AUM as possible towards achieving long term sustainability. We aim to take an active role in helping to secure the future of our planet, while simultaneously aiming to achieve the best possible returns for our investors.

How will the name change benefit investors in the fund?

After the change, investors will continue to benefit from a multi-asset portfolio with strong inflation protection, strong downside protection (namely through high quality inflation-linked sovereign bonds), plus an equity exposure that targets the growth opportunity of companies with durable, profitable business models, focused on their ESG responsibilities.

What will be the effect on the portfolio?

The name, investment objective and policy of the fund will change, but the fund’s core investment philosophy will remain unaltered. The overall fund remains a multi-asset fund whereby circa 40-50% of the portfolio will remain invested government bonds (primarily inflation linked) with the remaining 50-60% in equities. The equity sleeve is transitioning from a quantitative portfolio of over 300 global stocks to an active equity portfolio of approximately 80 global stocks, although there is some overlap between the equity portfolios.

Will costs be involved?

We will meet the costs of amending the fund’s documentation to reflect these changes and the costs associated with notifying the fund’s unitholders. As a result of the changes to the stock selection process (described above), the fund’s holdings will be realigned accordingly, and a substantial proportion of the investments currently held in the fund will be sold and the cash proceeds reinvested. We estimate that the associated costs of the portfolio realignment, in current market conditions, will be approximately 0.15% of the current value of the fund which will be payable out of the property of the fund. For illustrative purposes only, this would amount to a cost of £1.50 for every £1,000 invested in the fund.

Risk and Reward Profile

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The risk category is calculated using historical performance data and may not be a reliable indicator of the Fund's future risk profile. The risk category shown is not guaranteed and may shift over time. The lowest category does not mean risk free.

Why is this Fund in this category?

The capital of the Sub-Fund is not guaranteed. The Sub-Fund is invested in financial markets and uses techniques and instruments which are subject to some levels of variation, which may result in gains or losses.

Additional Risks

Risk linked to Method and Model: attention is drawn to the fact that the Fund's strategy is based on the utilisation of a proprietary share selection model. The effectiveness of the model is not guaranteed and the utilisation of the model may not result in the investment objective being met.

Hedging Risk: Currency Hedging within the Fund seeks to reduce the impact of exchange rate movements of the investments' currencies relative to the fund's base currency. Over a period of time the hedging strategy itself may create a positive or negative impact to the value of the Fund, mainly due to differences in short-term interest rates between the currencies. Inflation Linked Bond Risk: unlike other bonds, an inflation protected security (such as index linked gilts) reduces the negative effect of inflation on its real value. The market value of such securities will be affected both by the market's perception of future movements in interest rates and the future rate of inflation. Therefore the market value of such securities (and the value of the Fund) may not move in line with inflation rates in the short to medium term. Currency Risk: the Fund holds investments denominated in currencies other than the base currency of the Fund. As a result, exchange rate movements may cause the value of investments (and any income received from them) to fall or rise affecting the Fund's value.

The ESG data used in the investment process are based on ESG methodologies which rely in part on third party data, and in some cases are internally developed. They are subjective and may change over time. Despite several initiatives, the lack of harmonized definitions can make ESG criteria heterogeneous. As such, the different investment strategies that use ESG criteria and ESG reporting are difficult to compare with each other. Strategies that incorporate ESG criteria and those that incorporate sustainable development criteria may use ESG data that appear similar, but which should be distinguished because their calculation method may be different.