Axa Investment Management introduces two actively managed fixed income exchange-traded funds.
In a strategic move to expand its investment solutions, AXA Investment Managers (AXA IM) has unveiled two new active Exchange-Traded Funds (ETFs) focused on fixed income markets. The new ETFs, AXA IM Global Inflation-Linked Bond Opportunities Ucits ETF (ACPI) and AXA IM Short Duration Income Ucits ETF (ASHU), are set to be listed on Borsa Italiana and Six Swiss Exchange shortly, with initial availability across several European markets.
The AXA IM Global Inflation-Linked Bond Opportunities UCITS ETF (ACPI) targets inflation-linked bonds issued by OECD governments, aiming to provide investors with inflation protection by tethering coupon and principal payments to the inflation rate. This ETF benefits from rising inflation environments, as such bonds protect against the erosion of purchasing power due to rising prices. Its actively managed approach allows for flexible allocation within inflation-linked securities, enabling dynamic responses to shifting economic conditions and opportunities in both traditional and inflation-sensitive debt.
On the other hand, the AXA IM Short Duration Income UCITS ETF (ASHU) emphasizes short-dated, investment-grade corporate debt within the Bloomberg Global Aggregate Corporate 1-3 Year Total Return Index. This focus on short-duration debt reduces interest rate risk and volatility, making the ETF attractive in an environment where central banks are hiking rates or where rate uncertainty is high.
Both ETFs are classified as Article 8 under the EU's Sustainable Finance Disclosure Regulation, reflecting AXA IM's commitment to sustainable investing.
Key factors driving their success include active management and proprietary research, low fees, diversified and inflation-hedging exposure, and multi-exchange listings and trading flexibility. The ETFs leverage AXA IM's expertise in conviction-driven fixed income management, providing greater flexibility to adapt to inflation and interest rate trends and capture emergent opportunities. With total expense ratios of 0.20% for ACPI and 0.19% for ASHU, the ETFs offer cost-effective access to specialized fixed income segments.
The inflation-linked bond ETF provides a direct inflation hedge, which is critical for portfolio resilience amid persistent global inflation. The short-duration corporate debt ETF aims to mitigate duration risk while providing income in a volatile rate environment, appealing to yield-focused investors looking for stability.
These new ETFs combine AXA IM's key areas of expertise: conviction-driven management based on rigorous proprietary research and the proven experience of their Fixed Income investment teams. The ETFs are initially available in US dollars and euros on Deutsche Boerse Xetra.
In summary, AXA IM's new inflation-linked bond and short-duration income ETFs are performing in line with their design to address inflation and rate risk, driven by active management, low fees, and targeted exposures that align with today’s macroeconomic challenges. Their success is underpinned by AXA IM’s fixed income expertise and the strategic appeal of inflation protection and short-duration credit income in a rising rate environment.
References: [1] AXA Investment Managers (2023). AXA IM launches two new active fixed income ETFs. [online] Available at: https://www.axa-im.com/en/news-insights/news/2023/03/axa-im-launches-two-new-active-fixed-income-etfs
[2] ETF Strategy (2023). AXA IM launches two new ETFs to address market challenges. [online] Available at: https://www.etfstrategy.com/2023/03/16/axa-im-launches-two-new-etfs-to-address-market-challenges/
[3] Citywire (2023). AXA Investment Managers launches two new ETFs. [online] Available at: https://www.citywire.co.uk/news-and-analysis/axa-investment-managers-launches-two-new-etfs/a1894712
[4] Pensions & Investments (2023). AXA Investment Managers launches two fixed income ETFs. [online] Available at: https://www.pionline.com/article/20230316/NEWS/230319996/axa-investment-managers-launches-two-fixed-income-etfs
[5] Financial News (2023). AXA IM launches two new ETFs focusing on inflation and short-duration credit. [online] Available at: https://www.fnlondon.com/articles/axa-im-launches-two-new-etfs-focusing-on-inflation-and-short-duration-credit-20230316
The AXA IM Global Inflation-Linked Bond Opportunities UCITS ETF (ACPI) targets investment in inflation-linked bonds, leveraging technology for flexible allocation and dynamic responses to market conditions, all with a low fee structure. Its focus on OECD government bonds and active management aligns it with the regulation surrounding sustainable finance, making it an attractive option for investors seeking both inflation protection and a commitment to sustainability in their finance decisions.
The AXA IM Short Duration Income UCITS ETF (ASHU), on the other hand, addresses concerns of duration risk and volatility by focusing on short-dated, investment-grade corporate debt. By using technology to list on multiple exchanges and offering trading flexibility, it caters to yield-focused investors in a rising rate environment, where technology in finance plays a crucial role in managing and minimizing risk while aiming for income generation.
