AXAWF Global High Yield Bds E Cap EUR H

Analyst Report
Morningstar's Take
|25/08/2021

by Evangelia Gkeka


AXA WF Global High Yield Bond offers investors exposure to a differentiated and historically well-executed approach to high-yield investing. However, the sudden death of Carl Whitbeck, head of global high yield, as well as the departure of James Gledhill, head of European high yield, previously comanagers here, means the remaining team is having to regroup amid difficult circumstances. The Morningstar Analyst Rating for the strategy’s clean share class (F Cap USD) is downgraded to Neutral from Silver, while the most expensive share classes are rated Negative.The strategy had been managed by Gledhill and Whitbeck from July 2012 to July 2021. Gledhill was based in London and responsible for the European high-yield exposure of the portfolio. Whitbeck was based in Connecticut and responsible for US high-yield exposure; he was also managing AXAWF US High Yield Bond.After Whitbeck’s death and Gledhill’s departure, the portfolio managers/credit analysts who supported them in the day-to-day management of the portfolios will take over the leadership here.Michael Graham, who joined AXA in 2007 and worked alongside Whitbeck since then, has been appointed head of US high yield and is now lead manager. Graham will be supported by Robert Houle, US high yield portfolio manager, who has been a member of the team since 2005, and Yves Berger, who joined the firm in 2007 and is a portfolio manager focusing on European high yield. Moreover, the team has access to an experienced high-yield credit analyst team of 12 (eight in the United States, four in the United Kingdom) plus the wider credit resources of AXA.The team’s structured and well-executed approach is based on capturing income from high-yield bonds while avoiding principal loss. The process is largely driven by bottom-up fundamental analysis. Portfolio positioning is implemented through a barbell approach combining weaker (B to CCC) credits with short-maturity bonds, a differentiated process. Geographic allocation and sector exposure are secondary drivers, with the latter generally reflecting the team's preference for companies with stable business models and predictable cash flows.The strategy has consistently outperformed its peers on an absolute and risk-adjusted basis, providing evidence that the process has added value over the long term.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleSupporting Player.
Morningstar Pillars
PeopleAverage
The loss of Carl Whitbeck and departure of James Gledhill means the team is having to re-group.
ParentAverage
Competent but not outstanding.
ProcessAbove Average
Differentiated approach with overweightings in lower-rated and shorter-dated bonds.
Performance
The lower-credit-quality bias paid off over the long term while keeping volatility under control.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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