Our inflation capabilities
We believe that investing in inflation solutions offers not only the opportunity to mitigate against inflation, but also provides the potential to benefit from the rise in inflation. At the same time, these solutions offer the ability to diversify portfolios and explore alternative sources of performance.
Why consider investing in inflation solutions?
Potential to PREPARE for changes in inflation
- Annualised inflation of 2.5% over 10 years erodes the performance of an investment by 22%1, so investors need to mitigate inflation risks
- Higher levels of inflation can also be beneficial to certain investments – equities and real assets for example tend to rise in an inflationary environment
Potential to DIVERSIFY holdings in a portfolio
- Inflation-linked bonds have a low correlation historically to equities and bonds over the long term (for example a 7% correlation to global equities and a 31% correlation to global high yield bonds2)
- Assets return correlations with inflation vary depending on the economic cycle, so a multi asset approach could be beneficial for diversification beyond traditional hedges
Potential to offer an ALTERNATIVE SOURCE of performance
- Over the past 10 years, inflation-linked bonds have produced less volatile returns (over the past 10-year period, Barclays World Inflation-linked Hedged Index had a 4.67% return and 5.71% volatility) than traditional equity and bonds indices3
- Inflation sources can vary across the economic cycle – a diversified multi asset solution can offer exposure to this range of performance sources
Our inflation strategies
We have a diversified range of inflation strategies for different investor needs, with exposure to various geographies, durations and asset classes. Our range enables clients to mix our various strategies and share classes to achieve their desired positioning on inflation.
Inflation-linked BondsThese strategies focus on investing in inflation-linked bonds and nominal bonds issued by the same issuers, as part of breakeven trades. This range offers investors exposure to various geographies and durations.
Download our Inflation-linked bonds infographic
Why choose AXA Investment Managers
AXA Investment Managers was one of the first European asset managers to offer a dedicated inflation-linked bond fund in 1983. Since then, we have built up over 25 years of experience as a firm managing inflation assets for a diverse clients base around the world, including supranationals, banks, pension funds and insurance companies.
Our dedicated inflation-linked expertise has over 254 years of experience in managing inflation-linked assets. Our multi asset investment team, which manages a comprehensive range of outcome oriented solutions, matches this experience with over 255 years of average industry experience.
A diversified offering of solutions
Our range of strategies allow clients to mix various funds and share classes. These include inflation-linked bond strategies which provide exposure to real yields, breakeven and realised inflation, and a multi asset strategy targeting assets which are positively exposed to inflationary pressures.
Access to market insight and liquidity
Our scale of €19.3bn6 in inflation-linked assets under management globally enables us to have excellent insight on the market, its issuers and investors, and it also means we have good access to liquidity.
Figures in focus
in inflation-linked assets under management globally
in inflation-linked assets under management in our flagship funds
of experience in managing inflation solutions
Main risks associated with the asset class
- Credit Risk
- The risk that the company or government you have lent money to defaults.
- Impact of any techniques such as derivatives
- Leverage risk associated with certain strategies
1Source: AXA IM, 31/01/2017 – For illustrative purposes only
2 Source AXA IM, Datastream, Bloomberg as of 31/12/2016. Each correlation is calculated using the longest common data set available between each pair of assets. Indexes used to represent each asset class are: MSCI World TR Index, BofA Merrill Lynch Global High Yield TR Index and Barclays Global Inflation World TR Index.
3Source: Bloomberg as of 30/12/2016. Past performance is not a guarantee of future performance. In the same period, MSCI World Net Total Return Index had a 6.17% return and 13.35% volatility and JP Morgan Global Aggregate Total Return Bond Index had a 5.93% return and 7.93% volatility.
4, 5 Source: AXA IM as of 31/12/2016
6Source: AXA IM, 28/04/2017