We have added the AXA Sterling Credit Short Duration Bond fund to our Recommended list.

Fund Snapshot

A conservatively managed investment grade bond fund that focuses on the short-dated, final maturity date (or call date) of less than five years segment of the market.  Within its sector, the fund features in our 'Investment Grade Credit, Short Duration' category.

Fund Description – Key Points

• Lead manager, Nicolas Trindade, is experienced in managing short-dated credit mandates. He is passionate about the opportunity to generate attractive risk-adjusted returns from within this segment of the sterling credit market.
• The manager is seeking to provide consistent, incremental returns in excess of cash, while at the same time minimising interest rate risk and limiting overall volatility.  To achieve this, the fund is invested predominately in sterling-denominated investment grade corporate bonds with a final maturity date (or call date) of less than five years.
• The mandate is well defined, and the portfolio has a clearly stated role for investors.  The manager’s comprehensive and considered approach is supported by the rigour of the team’s macro-economic analysis and the assistance of a well-resourced team of credit analysts.

Characteristics and Utility

• The fund invests in short-dated bonds, which tend to have lower volatility than the broader corporate bond market.  That said, the income of the fund is likely to be lower than the aggregate corporate bond market due to the shorter maturities of the bonds in the fund and thus the lack of term premium (in other words, the extra yield demanded for lending for longer time periods).
• The manager aims to deliver a more favourable drawdown experience than would otherwise be expected from mainstream sterling investment grade bond indices, although it is not entirely immune from the vagaries of market direction.
• The fund has a balanced maturity profile to ensure a high degree of natural liquidity.  With an average of around 20% of the fund maturing each year, there is some protection against any future rises in interest rates, as the manager would be able to reinvest maturing bonds at higher yields.
• Given its specific mandate, performance should not be compared directly to mainstream corporate bond funds in the peer group, or to bond indices.
• The fund is suitable for investors seeking a more defensive way in which to invest in bonds, whilst understanding that over time, it is also likely to have a lower total return outcome than more broadly exposed corporate bond funds.

To view our full factsheet, please visit the fund page on our website.