AXA Global Strategic Bonds strategy - September 2022
- 03 November 2022 (5 min read)
UK bond market implosion adds to uncertainty
- The new UK government’s “mini budget” was met with a very negative market reaction
- UK gilt yields spiralled sharply higher and the Bank of England was forced to step in
- The strategy was well protected from a duration perspective in another volatile month
What’s happening?
- Rate hikes, hawkish central bank narrative and continued sticky inflation data continues to drive markets as total returns were once again deeply negative for global fixed income during the month.
- Markets were hit with a new dynamic in September as the new UK Prime Minister and Chancellor announced a very generous fiscal package with no transparent funding plan accompanying it and hence sent UK bonds into a tailspin.
- The implosion of UK fixed income markets led to an unwind of leverage within the large pension fund industry and subsequently exacerbated the issue and led to large selling of credit and other assets. Once again in 2022, this sharp increase in volatility led markets lower.
- US 10-year bond yields moved nearly 65bps higher although ended off their 2022 peaks. UK 10-year gilt yields touched 4.5% having started the month below 3%. Investment grade credit spreads moved to their wides of the year, while developed market high yield markets moved lower in line with equities, although not yet at their cheapest levels year-to-date.
Unconstrained Fixed Income
This provides the potential flexibility to capitalise on opportunities across the fixed income spectrum as and when they arise.
Find out moreVisit our fund centre
The aim of the strategy is to generate income and any capital growth over the long term (being a period of five years or more).
View fundsDisclaimer
Not for Retail distribution: This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.
Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment. Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. The strategies discussed in this document may not be available in your jurisdiction.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Please note that the management company reserves the right, at any time, to no longer market the product(s) mentioned in this communication in a European Union country by notification to its authority of supervision in accordance with European passport rules. In the event of dissatisfaction with the products or services, you have the right to make a complaint either with the marketer or directly with the management company (more information on our complaints policy available in English here). You also have the right to take legal or extra-judicial action at any time if you reside in one of the countries of the European Union. The European online dispute resolution platform allows you to enter a complaint form (by clicking here) and informs you, depending on your jurisdiction, about your means of redress (by clicking here).
Issued in the U.K. by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
Risk Warning
The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.