The Carmignac Portfolio Unconstrained Global Bond team explains why it has upped its exposure to energy and financials. The team also share with us what it sees as the future for fixed income investing as rates and inflation begin to rise.
Can you explain the fund's exposure to the energy and financials sector?
On the credit side, although reduced given tight valuations, we maintain an allocation to the European bank debt segment as well as commodity related corporate bonds. Firstly, bank credit of national champions across the capital structure should outperform as the multi-year trend of de-risking, deleveraging, and re-regulating banks works to decrease the excessive systemic discount still in
bank credit spreads. In particular, the banking policy shift from taxpayer funded bail-outs to unsecured creditor funded restructuring and resolution should drive increased bank risk differentiation and flight to quality within the periphery. The ECB's suppression of risk premia across the eurozone's non-bank investment grade credit market ought to force investor rebalancing into our favourite bank themes. Secondly, commodity-related corporate bonds remain attractive as they should benefit from the pick-up in commodity price.
What is the future for fixed income investing as rates and inflation begin to rise?
In the current scenario, where various factors such as the improving economic cycle, the switch from monetary to fiscal stimulus, and the presence of various political hazards, all pose a challenge to investors wanting to generate performance while overcoming the risks to bond markets. The threat of interest rates rising quickly in the coming period suggests investors should protect their portfolios against rising rates in the main developed countries and generally calls for unconstrained, opportunistic bond management, providing all of the leeway needed to tackle difficult markets and seize opportunities.
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Carmignac Portfolio Global Bond A EUR Acc (ISIN: LU0336083497) is a share class of the sub-fund of the Carmignac Portfolio Sicav. Ongoing charges: 1,20%.. The fund has other shares in other currencies. This document is intended for professional clients.
Promotional material - Source: Carmignac at 31/03/2017. This document does not constitute a subscription offer, nor does it constitute investment advice. Access to the Fund may be subject to restrictions with regard to certain persons or countries. The Fund is not registered in North America, nor in South America. The Fund has not been registered under the US Securities Act of 1933. The Fund may not be offered or sold, directly or indirectly, for the benefit or on behalf of a U.S. person, according to the definition of the US Regulation S and/or FATCA. 7.. The Fund presents a risk of loss of capital. The risks, fees and ongoing charges are described in the KIID (Key Investor Information Document). The Fund's prospectus, KIIDs, NAV and annual reports are available at www.carmignac. com, or upon request to the Management Company, or for the French Funds, at the offices of the Facilities Agent at BNP PARIBAS SECURITIES SERVICES, operating through its branch in London: 55 Moorgate, London EC2R. This material was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of (10/06/2013). The KIID must be made available to the subscriber prior to subscription.
