A banking industry racked with doubt
Two events have hit financial markets hard in recent days. First of all, the collapse of Silicon Valley Bank, a US regional bank specialised in the financing of start-ups, which had to realise a loss on its holdings of Treasury bonds, and was then caught in a bank run. The company has been placed into receivership.
A few days later it was the turn of Crédit Suisse to watch its share price plummet due to years of scandals and the refusal of its biggest shareholder to prop up the bank in the event of further difficulty. After several days of great uncertainty, the Swiss bank had to be taken over by its rival, UBS.
A long-dated exclusion from Anaxis funds
These two events again highlight the unpredictability and volatility of the financial and banking sector, and the difficulty of investing in it, especially in its bonds. Issuers’ balance sheets offer little visibility, and their solvency depends heavily on the fluctuating value of their financial assets.
This is why Anaxis does not invest its bond portfolios in the financial sector. There is nothing new about this. It is not a knee-jerk reaction to current events. Anaxis was created in the aftermath of the Great Financial Crisis and has always focused more on visible and non-cyclical sectors such as telecoms and healthcare, following an approach based on an in-depth analysis of each issuer. This makes our portfolios more robust and less volatile, and generally makes our investments less stressful.
Defensive 2026: an Investment Grade fund without financials
The latest addition to our range, Defensive Bond Opp. 2026, follows this tradition and brings more protection by investing in mostly Investment Grade bonds. The rise in yields is making this segment of the bond world attractive again, with a limited default risk.
This avoidance of the financial sector makes Anaxis Defensive 2026 one of the only fixed-maturity Investment Grade funds without financials on the market. According to JP Morgan, European Investment Grade funds have greatly increased their exposure to the bonds of companies in this sector over the past three years, pushing it above 40% of their portfolios at the end of 2022.
It is worth noting that financials are not the only companies to be excluded from the Anaxis Defensive 2026 portfolio as, for ESG reasons, we also exclude the fossil fuel, packaging, genetically modified organism, arms and tobacco industries. Nearly a third of the investment universe is therefore ineligible for our portfolio.
As a result of these exclusions, Anaxis Defensive 2026 offers bond investors a different option. This is reflected in the fund’s 10 biggest positions, which telecoms and commercial services dominate.
These exclusions are an important risk management tool, which makes sense particularly when the markets are under stress. And despite its positioning, Defensive Bond Opp. 2026 offers investors a historically attractive yield of 4.56% in EUR, as of mid-March.
