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.’