AXA Investment Managers (AXA IM) has announced AXA WF US Dynamic High Yield Bonds. The fund offers flexible exposure to the US high yield market by investing in cash bonds along with an overlay of credit default swaps (CDS) to enhance potential returns over traditional US high yield funds.
The fund, alongside the existing US Short Duration and US Core High Yield funds, completes the trilogy of US high yield bond funds AXA IM offers catering to varying investor needs and risk tolerances.
The AXA WF US Dynamic High Yield fund invests in a basket of USD cash high yield bonds and the fund manager seeks to invest in companies with solid business models and improving credit fundamentals.
Compared to the traditional US Core High Yield strategy, this fund will typically have a lower number of positions, thereby investing in our credit analysts’ highest conviction credit opinions. At the same time, the relatively low number of positions should allow the fund to better react to market moves in real time.
Carl Whitbeck, fund manager of the AXA WF Dynamic High Yield Bonds at AXA IM, said: “We believe that the recent volatility in the market provides opportunities to invest in US high yield. 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.”
In addition, the fund has the ability to write single name CDS protection in order to add leverage while expressing positive views on individual issuers.
AXA WF US Dynamic High Yield is a Luxembourg-domiciled Sicav. The fund was incepted in January 2014 with $100 million. The fund has both retail and institutional share classes and is currently registered in Luxembourg. AXA IM is considering registration across a number of countries globally.