Natixis AM launches Natixis Crédit Euro 1-3

Chiefly invested in Euro bonds supplied by private issuers rated “Investment Grade1“ with maturity 1-3 years, Natixis’s FCP [1] Crédit Euro 1-3 fund targets a performance +0.30% [2] above the Barclays Capital Euro Aggregate Corporate Credit 1-3 index over a recommended investment period of 2 years.

Article also available in : English EN | français FR

According to Natixis Asset Management, Short-term credit is an attractive asset class in the current context

Three main features make short-term credit an excellent investment opportunity in the present situation:

- Short-term credit has notched up 10 years of positive performances to September 30, 2011.
- The segment is less sensitive to higher rates and is less volatile than the credit market overall, and also shows a better risk/return ratio. By way of example, government bond/private bond spreads are now riding high on the short term, thereby providing the equivalent of a "cushioning" effect in the event of an increase of rates. At September 30, 2011 the spread offered by the 1-3 year segment cushioned the negative impact of an increase in credit spreads or rates of 1.40% [3].
- Short-term credit is also an attractive asset class in terms of the Solvency II regulations since it enables insurers to lower their regulatory capital with respect to an investment in all-maturities credit schemes.

Active investment, chiefly bottom-up

he Natixis Crédit Euro 1-3 fund operates active management on an "Investment Grade" universe. Diversification is a key factor in the management process, with a portfolio composed of 70 to 120 issuers across at least 10 sectors and the possibility of complementary diversification in High Yield securities and securitized assets (excluding CDO) [4]. A disciplined, solid and active investment process targets regular outperformance by reconciling the Top-Down and Bottom-Up approaches, albeit with preponderance of the latter:
- A "credit strategy" committee determines the credit directional criterion) and sectorial preferences every two months (Top-Down).
- A committee of managers and sector-specialized credit analysts (Financial, Defensive and Cyclical) meets weekly to select issuers and issues (Bottom-Up). The selection process is conducted through fundamental proprietary research and a relative expensiveness survey on the various issues. Natixis Crédit Euro 1-3 is mainly exposed to credit risk, interest rate risk and certain specific risks in connection with securitized assets.

he Natixis Crédit Euro 1-3 fund is managed by Cyrille Philippe (18 years’ experience) on a team of 11 credit management specialists. Under the responsibility of Philippe Berthelot, CFA (19 years’ experience) the team avails itself of a large number of resources:

- 2 financial engineers and 1 strategist.
- A 14-strong team of experienced credit analysts led by Cynthia Voorhees, CFA (21 years’ experience).

Natixis Crédit Euro 1-3 targets the full range of investors: professional and non-professional.

Next Finance , November 2011

Article also available in : English EN | français FR

Footnotes

[1] French mutual investment fund approved by the AMF markets authority.

[2] After deduction of management fees and operating expenses. Unit I. Performance target - Unit R = outperform the benchmark index.

[3] Source: Bloomberg and calculations by Natixis Asset Management (September 30, 2011). Spreads calculated on the 2-year Schatz rate (0.40%).

[4] High Yield: Rating lower than BBB- (Standard & Poor’s or equivalent; up to 15% of net assets; Securitized assets: up to 25% of net assets.

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