AXA Investment Managers has expanded its presence in emerging market debt with the launch of a China-focused short duration bond fund, Citywire Selector can reveal.
The Luxembourg-domiciled fund will be overseen by Honyu Fung, who joined from HSBC GAM in 2014 and works for AXA IM's joint venture AXA SPDB Investment Managers.
This new fund, called the AXA WF China Short Duration Bond fund, will invest two-thirds of its assets in Chinese debt issued by government, public or local authorities, as well as private companies and supra-national entities.
Within this, Fung will invest 30-70% in bonds denominated in onshore Chinese yuan, which AXA IM can access through its RQFII quota allocation. This is will 30-70% can be in offshore Renminbi (CNH) and US dollar debt.
Fung aims to limit the duration of holdings to less than three years to deliver a compelling risk-return profile. A shorter portfolio duration mitigates volatility from changes in the market level of interest rates.
Fung will also be able to invest up to 20% in corporate bonds, with the average duration of the fund set to be three years or less. Investment grade credit will be needed to be BBB- rated at minimum by S&P or equivalents.
This fund is the latest in the AXA IM short duration range which is made up of ten strategies with total assets under management of €25 billion.
It was formally launched on September 6 and is registered for sale in: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland and United Kingdom.