AXA WF Defensive Optimal Income

ISIN LU0094159554

Last NAV 79.7600 EUR as of 12/11/19

Overview

Investment objectives

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%.

Risk

Synthetic Risk & Reward Information scale

1 2 SRRI Value 3 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 13/11/2019

KIID FR 14/10/2019

Prospectus EN 07/10/2019

Prospectus FR 24/10/2019

Fund manager comment : 30/09/19

A new month, bringing new developments. There is no question that Donald Trump will have to face impeachment proceedings after further accusations of interference. In terms of data, the manufacturing PMI continued to drop while in the eurozone, Germany lost momentum and Italy went into a slide. The US Federal Reserve (Fed) and the European Central Bank (ECB) decided to adopt a more accommodative approach to their monetary policy. In the United States, the Democrats finally decided to launch impeachment proceedings against Donald Trump for the alleged use of State resources for personal purposes. Given that there has never been a successful impeachment in the past (Richard Nixon resigned before proceedings could take place and Bill Clinton was exonerated), there is some doubt as to whether these proceedings will have any real impact on the current president, particularly as the process is a long one. Nevertheless, the timing does not work in his favour since the presidential elections will be held in November 2020. In the short term, the composite ISM manufacturing PMI continued to drop (47.8 vs. 49.1 in August) and its New Exports Orders component fell to its lowest since the end of 2008. On the consumption front, expenditure is still dynamic but household confidence deteriorated, leading to increased risk in the medium term. The Fed implemented a further rates cut of 25 basis points (bp) to [1.75%-2%]. We can expect to see another cut in December, to [1.5%-1.75%] before a pause in 2020, unless recent tensions on the short-term liquidity market force the Fed to announce further measures, especially in terms of managing the reduction of its balance sheet. In the eurozone, the sentiment index of the European Commission (EC) remained stuck at a low level and the composite PMI fell to 50.4, its lowest since June 2013. Activity in Germany continues to cause concern and the government is still firmly opposed to the idea of budgetary stimulus plans. Despite the announcement of a plan intended to drive the ecological transition, this is only worth 0.4% of GDP (€54 billion over four years). France stood up better, with its business climate indicator slightly up. At its most recent monetary policy meeting, the ECB decided to drop its deposit rate by 10 bp to -0.5%, specifying that a two-stage system will be introduced on 30 October, thereby exempting a large portion of banking reserves from negative interest rates. Mario Draghi also announced that the ECB will relaunch its quantitative easing programme for 20 billion euros per month, for an unlimited term. Finally, the committee specified that rates will remain low, at least until mid-2020, and said that any increase in rates will be conditional upon core inflation approaching the 2% mark. In Italy, the Democratic Party (PD) and the 5-Star Movement agreed to form a new government led by former prime minister Giuseppe Conte. However, this is a fragile coalition, as intra-party dissensions cannot be ruled out (and Matteo Renzi has already quit the PD and created a new party). Spain will return to the polls on 10 November, unless an agreement can be reached between the Socialists and Podemos on the formation of a government. In Austria, the Conservative party came out on top in the recent elections (37%). The Greens, which gained large numbers of votes (14%), are expected to take their place in the new government, especially as the extreme right FPO party indicated that it would prefer a spell in opposition. In the United Kingdom (UK), Brexit dominated the news for the 39th month in a row (since June 2016). The Supreme Court delivered a severe rebuke to Boris Johnson, ruling that his suspension of Parliament was “void and of no effect”. The Conservative party is pushing for a deal with the EU before 31 October in order to meet the prime minister’s commitment to achieve Brexit “at all costs”. In the next few days, Boris Johnson will present a detailed plan, now expected to include “customs clearance” centres on both sides of the Irish border. However, the EU is fully aware that the renegotiation of the backstop does not only concern the safeguarding of Ireland’s commercial interests, but the very existence of the Union itself. In Japan, VAT increased from 8% to 10% with effect from 1 October. In the medium term, this is intended to reduce a still-sizeable public debt (226% of GDP), affected in part by soaring social welfare costs linked to population ageing. However, the government has passed measures that aim to avoid a recession in the short term, the most significant of which is the exemption of first necessity products. With regard to monetary policy, the Bank of Japan decided to maintain the status quo at its most recent meeting in September. In China, the regime celebrated its 70th anniversary. In his speech, Xi Jinping stated that “no force can stop the Chinese people and the Chinese nation from forging ahead”, making direct reference to the rioters in Hong Kong and the trade war and ideological differences setting it against the United States. With regard to the latest economic indicators, the Caixin manufacturing PMI climbed to 51.4 in August but it is difficult at the moment to dissociate the effects of speculation around the implementation of new customs duties by the US and the budgetary stimulus plan set in motion by the Chinese government a few months ago. In terms of allocation, our exposure in equities markets was stable at around 23.41%, broken down as follows: 4.86% in the United States, 10.27% in the eurozone, 2.26% in Europe outside the eurozone, and 3.04% in Asia (including 0.97% in Japan). Our equities allocation now represents 21.35% of the portfolio and is partially hedged on the eurozone and the United States. Our exposure in equities in the European banking sector is around 0.94%. 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 47.90% of the portfolio. The allocation in high yield credit was maintained at around 5.17% of assets with a preference for the European market. We have maintained our diversification on the fund AXA IM WAVe Cat Bonds, which represents 0.53%. The allocation in emerging markets bonds denominated in USD or EUR represents 3.87%. We also maintained our long position on inflation expectations in the eurozone for around 5% of the portfolio given the current levels. Our position on money market products was reduced and now represents around 1.64%. Over the month, the fund posted a net performance of +0.39%.

Performance

Performance chart

Period

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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
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Performance table

End date

Performance table Net performance Reference index Start date End date
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Risk table

End date

Risk table Fund volatility Benchmark volatility Tracking error Information ratio Sharpe ratio Beta Alpha
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Price table

Start date

End date

Price Date Portfolio AUM
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NAV

First NAV date 18/01/99

Administration

Distribution country

Distribution countries
Austria
Belgium
Denmark
Finland
France
Germany
Italy
Luxembourg
Netherlands
Norway
Spain
Sweden
Switzerland
United Kingdom

Fees

Ongoing Charges 0.75%
Management fees 0.50%

Fund facts

Currency EUR
Start date 18/01/99
Asset class MULTI-ASSETS
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