Axa is to launch an international corporate bond Oeic later this month offering a yield of around 8....
Axa is to launch an international corporate bond Oeic later this month offering a yield of around 8.9%, writes Leo Bland.
The fund, to be called Axa Global High Income and which is being launched on 15 January, will be managed by Karim Flitti, who works in both Paris and London for Axa. He will manage the fund as part of a four-strong investment team which is based in Paris focusing on the high yield corporate bond market.
The Oeic will invest in corporate bonds with credit ratings ranging from BB down to B+. Around two thirds of the assets will be in euro-denominated debt hedged back into sterling and one third in sterling denominated debt. The portfolio will also have the ability to invest up to 25% of the assets outside Europe, for example in the US high yield market, and will be available as an Isa.
Ashley Goldblatt, head of fixed income in London for Axa, said that although the focus is on the UK and European high yield markets, the fund may invest in the US if there are attractive sectors in this market which cannot be accessed in the UK and Europe.
Global High Income will have an underweight position in telecoms issues which will make up between 20% and 25% of the portfolio, compared with the market weighting of around 45% to 50%. Flitti is also looking to invest in sectors including drinks and beverages and financials. He will start with a portfolio of 30 to 35 stocks but will look to increase the number of holdings as the fund gets bigger.
Global High Income will have an initial charge of 3.5% and an annual management fee of 1.25%. IFA commission will be 3% initial and 0.5% renewal.
Mick Stirrup, head of investment markets at Axa, said: "We are aiming to make sure our clients understand this is a higher risk product. We are not targeting customers who would shift their money from the building society into this fund where this is their last money in the world."
Axa is launching the fund as part of a bid to become a big player in the Isa market. It is aiming to become a top-five provider of mutual fund Isas over the next three to four years.
Axa is the world's second largest manager of fixed income assets, with funds under management of £152bn in this asset class.
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