Axa IM unveils SmartBeta credit fund

Axa Investment Managers has launched the Axa Sterling SmartBeta Credit Bond fund for managers Mark Benstead and Lionel Pernias.

The Oeic fund, designed for institutional investors, aims to deliver low-cost credit exposure without the drawbacks of market cap-weighted, passive index-tracking strategies.

Benstead, head of sterling credit and Pernias, portfolio manager, follow a ‘Buy and Monitor’ strategy, to buy high quality credit which is held until maturity, unless the credit quality of a bond falls significantly.

The strategy also focuses on optimal portfolio construction and implementation at the time of investing in a bond, to maximise the yield captured and minimise the need for future turnover.

Axa said the fund is therefore designed to provide a way of protecting against systemic and event risks, while providing less volatile returns in a low-cost way.

Rather than track an index that relies on issuance-based debt, which leads to overweighting exposure to the most indebted issuers, the fund aims to reduce concentration to issuers and sectors.

The firm added ‘smart monitoring is also a key feature of the approach: the philosophy is Buy and Monitor rather than Buy and Hold, and significant changes in the credit worthiness of bonds will result in portfolio rebalancing.’