La Française fixed maturity high yield credit fund: La Française Rendement Global 2025 surpasses US$1 Billion mark

La Française is pleased to announce that in just over two years following its creation(1), La Française Rendement Global 2025 has reached €958 million (US$1.075 billion) in assets under management.

The fixed maturity fund is a diversified global portfolio of 160 high yield debt issuers with an average rating of B+ and an average net yield² of 3.48% (Source: La Française, as at 31/12/2019). The fund is managed by Akram GHARBI, Thibault CHRAPATY, Gabriel CRABOS and Jaafar IBARAGHEN. La Française AM currently manages close to €8 billion in credit.

Twenty years and €2.3 bn of investment experience are wrapped into La Française Rendement Global 2025, a discretionary fixed maturity global high yield fund. The investment strategy is designed to mitigate interest rate and credit risks while still delivering a potentially attractive rate of return. In terms of credit risk, the large investment universe covers a wide spectrum of countries and issuers, including Emerging Markets. La Française has a selective approach in an environment where credit quality remains reasonable but where selection is key because of the potential rise in defaults, particularly in cyclical sectors due to the trade war and the global economic slowdown. The strategy is a combination of carry and arbitrage in the event of new market opportunities or an increased default risk on one of the issuers held within the portfolio.

Akram Gharbi, the fund manager, maintains that investors, against the backdrop of a low interest rate environment, have little alternative but to look at more dynamic segments such as high yield. “With the exception of a rise in defaults in the US in 2015/2016 because of oil & gas turmoil, the global default rate for high yield bonds has been below 3% per year over the last 10 years (Source: Bank of America Merrill Lynch). High yield is one of the few asset classes to continue to offer an attractive relative return. The relative success of the fund, judging by net inflows, is the results of the pertinence of the investment strategy in today’s low interest rate environment.”

La Française Rendement Global 2025 entails certain risks including the risk of capital loss, interest rate risk, default risk relating to issuers of debt securities, etc.

¹ The sub-fund (La Française Rendement Global 2025) originates from the merger absorption of the La Française Rendement Global 2025 mutual fund created on 30 August 2017, with an identical strategy and absorbed on 5 December 2018.

² after deduction of running and hedge fees