European high yield bonds still attractive, says AXA IM

Despite concern about the overall health of the Eurozone, AXA Investment Managers is confident the European high yield bond market still offers a range of investment opportunities.

According to Andrew Wilmont, head of European high yield at AXA IM and manager of the AXA Global High Income Fund, there are plenty of ideas to pick from when it comes to investing in European high yield bonds.

Wilmont’s fund is currently invested in 366 stocks providing a diversified spread. The fund’s top ten holdings represent roughly just 7% of the entire portfolio.

“We don’t want too much exposure in any one company even though we might like a company very much,” Wilmont explained in a live AXA IM webcast.

He added that despite market risks at the moment, high yield corporate bonds are not necessarily risky. “None of the companies in our portfolios have defaulted,” he said, adding that there should be fewer company defaults in Europe going forward.

This is partly because of the cull of weak, flawed or struggling companies following 2008 and the onset of the financial crisis. “If companies came out of 2008 alright they should be doing well,” Wilmont explained.

The one section Wilmont remains cautious about is financials. The fund is currently underweight financials compared to its benchmark, he said.

Its performance indicator is the Merrill Lynch Global High Yield index hedged in sterling. AXA IM’s fund has outperformed its benchmark and is up 1.04% year to date compared to the index’s 0.86% year to date returns.

The fund aims to deliver long-term high-yield returns through investing in a diversified portfolio of ‘sub-investment grade’ bonds.

The fund can also invest in transferable securities, derivatives, cash, deposits, units in collective investment schemes and money market instruments.

There are currently £54m of assets under management (as at June 2011) in the fund and it has a minimum investment of £1000.

Wilmont joined AXA IM in April 2005 having previously worked at Pareto Partners, New Flag Asset Management and Saudi International Bank.

AXA Global High Income Fund launched in January 2001.

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Madison Marriage
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