Bolstered by the commercial success enjoyed by the previous vintage, La Française Rendement Global 2022, and the relevance of this investment solution in the current interest rate environment, La Française is launching a new edition of its fixed maturity fund: La Française Rendement Global 2025.
Since fixed maturity funds have a known and fixed issue maturity date, the investor benefits from visibility with respect to the fund's performance as it approaches maturity. The fund’s profitability will depend on both the valuation of the bond coupons included in the portfolio, and changes in capital due to fluctuating interest rates and/or credit spreads.
The management strategy is discretionary and concerns a portfolio of international bonds with a maximum maturity date of December 2025. The strategy consists of combining the carry and arbitrage of securities, in the event of new market opportunities or an increased risk of default of a portfolio issuer. Accordingly, it relies on a thorough knowledge of the companies’ balance sheet positions and the fundamentals of the countries selected.
La Française Rendement Global 2025 has a capacity for diversification and may invest1:
- up to 100% in bonds issued by public and/or private entities in OECD countries;
- up to 100% in bonds issued by public entities outside of OECD countries (emerging) and up to 50% in private entities outside of OECD countries (emerging);
- up to 100% in Investment Grade2 or High Yield3 issues (of a speculative nature) or in unrated issues.
The fund marketing period will end no later than on 31 March 2020.
Jean-Luc Hivert, CIO Fixed Income of La Française, comments: “In the quest for performance, we believe the credit sector and especially BB or B rated issues offer the best risk/return ratio, especially since the default rates are still relatively low: the average long-term default rate is 4.3% (over 20 years as of September 2017)4. The fund will be positioned mainly on European/US credit and emerging debt, two of La Française’s core areas of expertise in fixed income.”
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1 For more information on the investment strategy, check the fund’s prospectus.
2 rating equal to or exceeding BBB- at Standard & Poor’s or Baa3 at Moody’s, or equivalent according to the management company’s analysis
3 rating below BBB- or Baa3, or equivalent according to the management company’s analysis)
4 source: Bank of America