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AXA WF Euro Credit Plus A EUR
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Latest Fund Manager commentary:
The consolidation phase that began in the middle of March continued on the credit market during April, despite satisfactory macroeconomic figures from across the Atlantic. There was an even greater dichotomy with the eurozone, where the PMI index remained unchanged at 47.7 but still signalling a contraction in activity, while unemployment continued to climb as a result of restrictive budgetary policies. Spain is still a worry for market participants and, against this background, we witnessed a return of tension around peripheral sovereign debts. After an extremely favourable first quarter, peripheral debts underperformed their peers from the core countries. Besides the worrying situation in Spain, there was a series of bad macroeconomic news in Europe, which fuelled the sense of scepticism among investors, as industrial production indicators in Germany and the United Kingdom were lower than expected. Spreads on banks and corporates from the peripheral countries underperformed the market. The effect of the LTRO seems therefore to be wearing off somewhat, for senior debts as well. The primary market remained practically closed for the whole month.
Against this background, we maintained a prudent bias throughout the month, underweighting in subordinated financials and Spanish and Italian debts. However, this defensive position was partly reduced over the last week of the month, particularly on senior banking debt. In fact, despite bad macroeconomic data in Europe and political uncertainty, it was the “technical” elements on the market (lack of new issues, high levels of liquidity, etc.) which dominated this month. We maintained cash reserves in the portfolio, given the uncertain environment in which we find ourselves, and anticipate that the primary market will reopen in the near future.