AXAWF Global High Yield Bds E Cap EUR H |
by Evangelia Gkeka
AXA Global High Yield Bond offers investors exposure to a differentiated and historically well-executed approach to high-yield investing. We maintain the People and Process ratings unchanged at Average and Above Average, respectively. Michael Graham, who joined AXA in 2007 and worked alongside previous portfolio manager Carl Whitbeck, is head of US high yield and lead manager of the strategy since August 2021. Graham is supported by Robert Houle, US high-yield portfolio manager and member of the team since 2005, and Yves Berger, who joined the firm in 2007 and is a portfolio manager focusing on European high yield. In January 2022, Chris Ellis joined from Artemis as a portfolio manager on the European high-yield side. The team also has access to an experienced high-yield credit analyst team of 11 (seven in the US, four in the UK) plus the wider credit resources of AXA. The strategy was managed by Whitbeck and James Gledhill from July 2012 to July 2021. The summer of 2021 saw Whitbeck’s untimely passing. He was based in Connecticut and responsible for US high-yield exposure; he was also managing AXAWF US High Yield Bond. Gledhill was based in London and responsible for the portfolio's European high-yield exposure. The team’s structured and well-executed approach is based on capturing income from high-yield bonds while avoiding principal loss. The process is largely driven by bottom-up fundamental analysis. Portfolio positioning is implemented through a barbell approach combining weaker (B to CCC) credits with short-maturity bonds, a differentiated process. Geographic allocation and sector exposure are secondary drivers, with the latter generally reflecting the team's preference for companies with stable business models and predictable cash flows. On Aug. 1, 2024, AXA IM announced that it entered into an exclusive negotiation to be acquired by BNP Paribas AM. There has not been any guidance so far on the personnel implications of the transaction. The strategy has consistently outperformed its peers on an absolute and risk-adjusted basis, providing evidence that the process has added value over the long term. During a very difficult 2022, the strategy outperformed both its peers and Morningstar Category index. An overweighting in the defensive shortest-duration segment of the market and an underweighting in better-quality longer-duration helped, as did security selection in the highest-yielding segment of the market, positive selection in healthcare and real estate, and an overweighting in services. In 2023, it outperformed peers but underperformed its category index. Overweight exposure in the highest-yielding segment of the market, an underweighting in the shortest-duration and higher-quality segment, security selection in media and industrials, and an underweighting in real estate contributed. On the negative side, security selection in retail, telecoms, and financial services detracted, as did an underweight allocation in retail and financial services. Cash holdings were also a drag as the market produced a strong positive total return. |
Morningstar Pillars | |
People | Average |
Parent | Average |
Process | Above Average |
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