The Candriam Bonds Total Return Defensive Fund is billed as a flexible, low duration global bond fund. Whereas most such funds come with the vague promise they aim to “achieve positive returns over the medium term”, Candriam is more specific/ambitious.
The fund aims to deliver a net annual performance 1% higher than the Euro Overnight Index Average (EOINA), while maintaining an ex-ante volatility below 2% over a two-year investment horizon.
On top of the management fee, a 20% performance fee is charged over the outperformance over the reference index, EOINA +200bps.
Fixed income now accounts for 32%, or €35.2bn, of the New York Life Investment Management-owned firm’s €108bn of assets under management.
Given the “challenging fixed income environment characterised by low yields, rising rates and weaker liquidity”, Candriam global head of fixed income Nicolas Forest said the team wanted to create a solution for short-term debt investors.
The total return debt fund invests across sovereign bonds, corporate credit and currencies in developed and emerging markets and can take both negative and positive duration positions, between -1 and +3, as well as long and short exposure to credit and currency markets.
The bonds it invests in have a maturity limit of five years for each issuance, a minimum credit rating of BB and a maximum ex-ante volatility of 2%.
It also uses derivatives to generate alpha or hedge exposure to markets.
The fund will be overseen by manager Damien Martin, with Forest and Alain Peters serving as co-managers. The team will also leverage the experience and resources of Cadriam’s 30-person strong global fixed income group.
“We have significant experience and expertise in managing non-benchmarked, total return products within the team, and we aim to apply this philosophy to short-term fixed income markets, where investors are struggling to find returns,” Forest added.
It is currently registered for sale in Luxembourg, Austria, Germany, France, Spain and the UK.