As La Française Asset Management moves to strengthen its fixed-income arm through appointing a new department head, Citywire Selector caught up with its new chief, Maud Minuit, to uncover the focal points for its alternative bond strategies sector.
#1 - Source of performance
'As of the end of October, the main source of performance for the La Française Lux-Multistratégies Obligataires fund, this year has been the allocation on high beta debt,' she said.
'In a very low yield and squeezed volatility environment - as monetary policy from main central banks remained accommodative - Portugal in the sovereign universe, financial subordinated debt and HY debt allocation in the corporate universe have all worked well.'
#2 - Fed focus
'Our main focus for 2018 will be, first, the exit strategy from the Federal Reserve Bank as Jerome Powell will succeed Janet Yellen, and our attentions will be focused on the most significant turnover in Fed leadership in decades,' Minuit said.
#3 - Economic trends
'There is mounting evidence for a number of ECB members that the economic trend in the eurozone is solid and self-sustaining, which should provide them with more confidence that inflation will move towards their target.
'US tax reform should pass in the near future and surprises on inflation this year were mostly negative: considering the very weak level of expectations from financial markets on these two points, it could drive US rates higher. Indeed, a pick-up in US core inflation remains a key determinant of whether or not the Fed will raise rates in 2018.
'Elsewhere, elections already planned in Italy, Mexico and Hungary, for example, could bring some volatility next year, creating opportunities,' Minuit added.