Keeping volatility low
Our Anaxis Short Duration fund has a clear ambition: to generate performance for our investors while maintaining a low volatility profile, with the aim of preserving capital. The key indicator of its success is a Sharpe ratio close to 1.
The fund’s strategy focuses exclusively on corporate bonds. We do not invest in derivatives. We take a pure asset class approach, with fundamental bottom-up analysis. We focus on resilient sectors for their low volatility, with structural underweight in cyclical sectors. The latter may not exceed 33% of the portfolio.
We focus on the short end of credit. This means low duration and good visibility over the issuer’s ability to service its debt. We focus on large and liquid bonds. To serve our ambition of low volatility, we focus on high-quality bonds, with a lower rating limit of B-.
An in-depth analysis of issuers
Each issuer is subject to an analysis report, and a critical approach is taken to its operational financials. We select companies whose revenues, profits and cash flows offer visibility and stability. We attach particular importance to the issuer’s ability to deleverage itself in its free cash flow generation.
We analyse and critique the covenants, i.e. the guarantees attached to the bonds, from which we, as bondholders, can benefit in the event of a credit complication. Finally, due to the short-term nature of the fund, we carefully study the issuers’ liquidity situation. This allows us to anticipate what resources the company’s management could use in the event of financial market volatility or operational difficulties.
Sustainability at the heart of our strategy
In addition to these management rules, we also apply ethical criteria. Anaxis has put in place an ambitious and strict ESG policy. The approach is based on sectoral exclusion. We have defined and excluded from our portfolios the sectors that we do not wish to finance, with a view to decarbonising our portfolios. We do not finance fossil fuels, including oil, gas and coal. Nor do we finance the plastic packaging, nuclear or tobacco industries, GMO-related activities, or armaments.
