Managed by Honyu Fang, a senior portfolio manager on the Asian fixed income team, the Axa World Funds China Short Duration Bonds Fund launched on September 6 and becomes the tenth strategy in group’s short duration range.
The fund will invest in renminbi bonds as well as in hard currency corporate bonds, and will be available in a euro-hedged share class.
The Luxembourg Sicav, which is co-managed by Axa IM’s joint venture Axa SPDB Investment Managers in Shanghai, adopts a bottom-up security selection approach, investing in bonds with an average rating of BBB+, with duration limited to less than three years.
Offshore and onshore
Jim Veneau, head of fixed income at Axa IM, said: “We believe the complementary nature of both teams will allow the fund to effectively capitalise on market developments in both offshore and onshore Chinese bonds and actively capture cross-border arbitrage opportunities in the onshore (CNY) renminbi, the offshore (CNH) renminbi and the hard currency Chinese credit markets.”
He added: “We want to give our clients exposure to this rapidly accelerating bond market, currently the third largest in the world, and the significant opportunities it has to offer. At the same time we appreciate the need to mitigate risk in today’s environment – our approach seeks to provide attractive returns, while keeping duration short and managing volatility through the market cycle.
“China has risen to become a major power in the global financial market and we believe that its accelerating financial integration presents significant investment opportunities. From a risk-reward perspective we believe the Chinese bond market is attractive, despite the inherent risks, as recent global monetary accommodation has left most global rates at historically low levels.”