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AXA WF Defensive Optimal Income

ISIN LU0094159554

Last NAV 80.7500 EUR as of 14/01/20

Overview

Investment objectives

The Sub-Fund is actively and discretionarily managed in order to capture opportunities across a wide array of asset classes, with an investment strategy that uses:- Tactical asset allocation (based on medium term macroeconomic views and the identification of short term market opportunities)- Portfolio construction in order to manage risks in accordance with market environment and fund objectiveThe Investment Manager will seek to achieve the objectives of the Sub-Fund by investing in/exposing the Sub-Fund to a set of equities (up to 35% of the net assets of the Sub-Fund) and/or investing in transferable debt securities issued by any governments, companies or public institutions in OECD countries. Nevertheless, the Investment manager may invest up to 15% of its assets in equities and or transferable debt securities issued by any governments, companies or public institutions based in non OECD countries.Within the above 35% limit, the Sub-Fund may invest up to 20% of its assets in small capitalization companies.The Sub-Fund will not invest more than 15% of its net assets in transferable debt securities rated sub investment grade.The selection of credit instruments is not exclusively and mechanically based on their publicly available credit ratings but also on an internal credit or market risk analysis. The decision to buy or sell assets is also based on other analysis criteria of the Investment Manager.If in the opinion of the Investment Manager, there is a risk of a significant adverse market move the Sub-Fund may have all its assets in cash, cash equivalent and/or Money Market Instruments. The Sub-Fund seeks to achieve medium term capital growth by investing in a diversified portfolio of broad asset classes, through a defensive approach aiming to limit the annualised volatility at 5%. The Sub-Fund applies AXA IM Environmental, Social and Governance (ESG) Standards available on www.axa-im.com/en/responsible-investing.The Sub-Fund's global exposure will be monitored by using the absolute Value-at-Risk (VaR) measurement with a maximum VaR of 1.10% with a five (5) Business Days horizon and 95% confidence level which corresponds to a VaR of 3.11% with a twenty (20) Business Days horizon and 99% confidence level under VaR normal distribution assumptions. This means that there is a probability of 5% that a loss experienced by the Sub-Fund within the five (5) Business Days horizon may be higher than 1.10% of the Sub-Fund's Net Asset Value, under normal market conditions.The Investment Manager expects that the level of leverage of the Sub-Fund based on the sum of the notional approach will be between 0 and 3. However, the attention of any investor in the Sub-Fund is drawn to the fact that the effective level of leverage of the Sub-Fund may be higher than the expected level of leverage set forth above from time to time due to market conditions.The investment strategy may be achieved by direct investments and/or through derivatives including by entering into Credit Default Swaps and Total Return Swaps. Derivatives may also be used for hedging purposes.The Sub-Fund will be managed with an interest rate sensitivity ranging from -2 to 8. The sensitivity is an indicator measuring the impact of a variation of 1% of the market interest rate on the value of the Sub-Fund.The Sub-Fund may invest up to 5% of net assets in contingent convertible bonds (CoCos).

Risk

Synthetic Risk & Reward Information scale

1 2 3 SRRI Value 4 5 6 7

The risk category is calculated using historical performance data and may not be a reliable indicator of the Sub-Fund's future risk profile. The risk category shown is not guaranteed and may shift over time. The lowest category does not mean risk free.

Why is this Fund in this category?

The capital of the Sub-Fund is not guaranteed. The Sub-Fund is invested in financial markets and uses techniques and instruments which are subject to some levels of variation, which may result in gains or losses.

Additional risks

Credit Risk: Risk that issuers of debt securities held in the Sub-Fund may default on their obligations or have their credit rating downgraded, resulting in a decrease in the Net Asset Value. Impact of any techniques such as derivatives: Certain management strategies involve specific risks, such as liquidity risk, credit risk, counterparty risk, legal risk, valuation risk, operational risk and risks related to the underlying assets.The use of such strategies may also involve leverage, which may increase the effect of market movements on the Sub-Fund and may result in significant risk of losses. Discretionary Management Risk: for any given Sub-Fund, there is a risk that investment techniques or strategies are unsuccessful and may incur losses for the Sub-Fund. Shareholders will have no right or power to participate in the day-to-day management or control of the business of the Sub-Fund, nor an opportunity to evaluate the specific investments made by the Sub-Fund or the terms of any of such investments.

Investment horizon

This Sub-Fund may not be suitable for investors who plan to withdraw their contribution within 3 years.

Main documents

KIID EN 23/12/2019

KIID FR 23/12/2019

Prospectus EN 07/10/2019

Prospectus FR 24/10/2019

Fund manager comment : 31/12/19

November was a better month in terms of good news. Business climate surveys point to a stabilisation of the economy in the short term, helped along by the central banks’ accommodative monetary policies. Nevertheless, there could be bumps in the road ahead with regard to the trade agreement between the United States and China, and Brexit. In the United States, the economic environment continues to defy expectations. Q3 GDP growth was revised upwards to +2.1% quarter-on-quarter annualised (QoQ annualised) vs. an initial estimate of +1.9%. The ISM manufacturing index remained stable at 48.1, checking the downturn seen since last March. The hearings in the impeachment proceedings continued with no major impact on public opinion for the moment... if that does not change, the Republican camp will probably not vote for impeachment. Finally, Michael Bloomberg, former mayor of New York and founder of the financial information company that bears his name, formally announced that he will stand as presidential candidate for the Democrats. In the eurozone, Germany finally posted growth for the third quarter that exceeded expectations at +0.1% quarter-on-quarter, thus narrowly avoiding technical recession. The most recent indicators point to stabilisation of economic activity, as witnessed by the latest manufacturing PMI, which was slightly up at 46.9. In Germany, the elections for the head of the SPD, partner in the ruling coalition led by Angela Merkel, resulted in the appointment of two critics of the coalition. In Spain, the ruling socialist party came out on top in the elections, but fell short of a majority. An agreement with Podemos was reached, but Pedro Sánchez, head of the socialist party, will now have to hold talks with the regional parties (especially the Catalans) to obtain support from Parliament. In France, the renewable general strike that will begin on 5 December could have a disruptive effect on activity. Regarding monetary policy, Christine Lagarde has just begun her term as President of the ECB. One of her first priorities will be to reach a level of agreement within the Governing Council, which is in turmoil after the most recent decisions taken by Mario Draghi. She will also need to launch a strategic review of the ECB’s objectives and the tools still available to it, to reach these objectives. In the United Kingdom, the early general election, to be held on 12 December, will prove to be decisive for the future of the country. Brexit could be a done deal if the Conservatives win a majority. The two parties have spared no effort in terms of their election pledges and this is likely to result in vast increases in public expenditure. If neither party achieves a majority, it is likely that the agreement concluded with the EU will not be signed, and Brexit will be deferred once again. In Japan, growth for the third quarter was disappointing (+0.2% QoQ annualised). Although there has been an upswing in consumption ahead of the increase in VAT, retail sales slumped to -7.1% year-on-year in October. In the manufacturing sector, the PMI index recovered very slightly to 48.9. In China, despite uncertainties around the continued trade tensions, the manufacturing sector seemed to have stabilised, with the PMI making slight progress to 51.8. However, profits in the industrial sector dropped back by around 10% in October. Finally, Beijing announced the issue of $142bn in bonds in order to maintain public investments. The People’s Bank of China dropped its short-term interest rate 5bp to 2.50% for the first time since 2015. In this backdrop, equity markets moved higher in November. In the United States, the S&P 500 index was up +3.4% and in Europe, the Euro Stoxx 50 gained +2.8% with the French CAC outperforming at +3.1% and the German DAX at +2.9%, while the peripheral markets underperformed: the Italian MIB at +2.5% and the Spanish IBEX at +1%. In the United Kingdom, the FTSE 100 only gained +1.5%. The Asian markets moved in different directions: the Japanese Nikkei and TOPIX indices consolidated the gains made last month, increasing +1.6% and +1.9% respectively, while the Chinese markets were under pressure; the Hang Seng in Hong Kong dropped -2.1% and the Shanghai Composite -2%. Emerging markets (MSCI EM Total Return) were stable in dollars and gained +1% in EUR. Bond markets dropped back a little, with the economic environment ceasing to deteriorate and the central banks seeming to be on hold. US 10-year yields reached +1.8%. Yields on the 10-year German Bund were also up at -0.36%, as were those on the French OAT, at -0.05%. Yields on the 10-year Italian BTP and Spanish Bonos increased more, to +1.2% and +0.4% respectively. The 10-year UK Gilt was up at +0.7% and yields on Japanese bonds climbed to -0.07%. On the credit market, IG spreads on both sides of the Atlantic widened slightly, with those on US and European high yield bonds widening more. On the foreign exchange market, the US dollar gained slightly, as reflected by the dollar index, which was up +1%. The euro depreciated -1.2% to 1.10 and the Japanese yen was down -1.3%, while the pound sterling remained stable at 1.29. On the commodity markets, the Bloomberg Commodity ex-agriculture and livestock index dropped -3.4% due to the drop in energy and gold prices. Although oil prices continued to trade within a relatively narrow range (Brent +3.7%, WTI +1.7%), the price of natural gas in the United States dropped -16.5%. Industrial metals remained stable but gold dropped -3.2% to 1,464 dollars per ounce. In terms of allocation, our exposure to equities markets increased to around 29%. Our selection of equities is partially hedged in the eurozone and the US. Our exposure to equities in the European banking sector is around 1.22%. Among the equities we increased the basket of European cyclical stocks already present in the portfolio and still discounted relative to the rest of the market by 2%. On the bond market, modified duration is still relatively low even though it increased as a result of investments on the credit market in recent months, to take advantage of a yield premium compared with the sovereign bonds market. The allocation in investment grade credit now represents around 47% of the portfolio. The allocation in high yield credit was maintained at around 3.00% of assets with a preference for the European market. We maintained our diversification in the AXA IM WAVe Cat Bonds fund, which represents 0.55% and kept the AXA WF Multi Credit fund for 0.76% for diversification purposes and to take advantage of this fund's entire credit spectrum. We also maintained our long position in eurozone inflation expectations at 6.5% of the portfolio as well as that in inflation expectations in the US at 3.5%. The fund is still mostly exposed to the euro. We increased by 1% the carry position on long exposure to the Canadian dollar and short on the Swiss franc, given the more accommodative tone from the central bank of Canada and in a solid macro-economic backdrop in Canada. Over the month, the fund posted a net performance of +0.60%.

Performance

Performance chart

Period

1M
3M
6M
1Y
3Y
5Y
8Y
10Y
YTD
Since launch

Start date

End date

Past performance is not a reliable indicator as to future performance.
Performance calculations are net of management fees. Performance are shown as annual performance ( 365 days). In the case where the currency of the investor is different from the Fund’s reference currency the gains are capable of varying considerably due to the fluctuations of the exchange rate.

Benchmark

Reference index Start date End date
- - -

Performance table

End date

Performance table Net performance Reference index Start date End date
- - - - -
1M - - - -
3M - - - -
6M - - - -
YTD - - - -
1Y - - - -
3Y - - - -
5Y - - - -
10Y - - - -
Since launch - - - -
1y - - - -
3y - - - -
5y - - - -
10y - - - -
Since launch - - - -
Y-1 - - - -
Y-3 - - - -
Y-5 - - - -

Risk table

End date

Risk table Fund volatility Benchmark volatility Tracking error Information ratio Sharpe ratio Beta Alpha
1M - - - - - - -
QTD - - - - - - -
3M - - - - - - -
6M - - - - - - -
YTD - - - - - - -
1Y - - - - - - -
3Y - - - - - - -
5Y - - - - - - -
8Y - - - - - - -
10Y - - - - - - -
Since launch - - - - - - -

Price table

Start date

End date

Price Date Portfolio AUM
- - -

NAV

First NAV date 18/01/99

Administration

Fees

Ongoing Charges 0.75%
Management fees 0.50%

Fund facts

Currency EUR
Start date 18/01/99
Asset class MULTI-ASSET
Expertise Total Return & Allocation
Range AXA World Funds
Legal country Luxembourg
Custodian State Street Bank Luxembourg S.C.A
Clearing house Fund Settle
Asset manager AXA INVESTMENT MANAGERS PARIS S.A.
Depositary State Street Bank Luxembourg S.C.A
Legal asset manager AXA Funds Management SA (Luxembourg)

Portfolio management

Fund Manager Serge PIZEM
Co-manager Laurent RAMSAMY
Investment team MT Asset Allocation

Structure

Investment area Global
Legal form SICAV

Subscription and redemption

The subscription, conversion or redemption orders must be received by the Registrar and Transfer Agent on any Valuation Day no later than 3 p.m. Luxembourg time. Orders will be processed at the Net Asset Value applicable to the following Valuation Day. The investor's attention is drawn to the existence of potential additional processing time due to the possible involvement of intermediaries such as Financial Advisers or distributors.The Net Asset Value of this Sub-Fund is calculated on a daily basis.

Literature