European High Yield1 the fund's primary focus, should perform particularly well.
MILLESIMA 2021 : MAIN CHARACTERISTICS
The fund was launched on January 25 2016 and marketing period will extend to June 30 2016. This is a Buy & Hold portfolio with a December 31 2021 maturity. Positions will normally be held until they mature. Millesima 2021 seeks to return an annual 3.8% (C & D shares) net of commissions over the recommended investment horizon.
The fund invests primarily in euro-denominated company bonds with a focus on high yield bonds (speculative securities with a higher risk of issuer default). A maximum 10% can be invested in the lowest-rated bond segment (between CCC+ and CCC-) or what proprietary rating procedure deems an equivalent rating. The fund is designed to be held until the strategy matures in December 2021 and offers issuer and sector diversification so as to limit concentration risk.
With today's low, and even negative, interest rates and high risk asset volatility, investors are searching for investment solutions which offer visibility and yield. Millesima 2021 meets these requirements. The fund seeks to capitalise from attractive yields on the dynamic Euro-denominated high yield corporate bond market albeit in return for higher risk. The investment team, moreover, is convinced that European companies are currently enjoying a generally favourable environment. The fall in the euro and persistently rock bottom interest rates will continue to help company margins rise.
EUROPEAN HIGH YIELD : ADVANTAGES
The high yield segment benefits from powerful support factors : moderate economic growth, very low inflation and the European Central Bank's scaling up of its asset purchase programme. The ECB's safety net and healthy European companies have boosted confidence in the high yield debt market. High yield is a little less sensitive to interest rate movements than other bond market segments and it also offers some of the most attractive yields. The European market currently offers an average coupon of 6% and an average yield of 5-6%2.
European high yield has become a must both for issuing companies and investors and has thus become more diversified. There are now more than 300 issuers, four times the level seen only five years ago. Historically low benchmark rates have reduced borrowing costs for companies and, with banking disintermediation on the rise, they are more and more likely to go to markets for funding. Moreover, default rates are now below their historic mean (currently 3% in Europe compared to 6% in the US).
The new issues market is still buoyant. 2014 saw record issuance of more than EUR 84bn. 2015 followed the trend even if net issuance edged lower. And in recent months ratings have been improving. 2016 is expected to see around EUR 60bn in new issues. Even this is a very disparate market and so selectivity is key.
RECOGNISED EXPERIENCE IN FIXED MATURITY FUNDS AND HIGH YIELD
Edmond de Rothschild Asset Management was a pioneer in fixed maturity funds in France and has launched six funds since 2009. The funds were initially 100% invested in investment grade (Millesima 2012), but gradually turned to high yield when yields started to fall a few years ago. We are convinced that this sort of investment solution is the right choice in the current low interest rate and high volatility environment.
Edmond de Rothschild Asset Management offers conviction driven investing on the high yield market from 4 specialist and highly experienced fund manager/analysts. Team members have 12 years experience on average and carry out in-depth analysis of company fundamentals. The team has devised a proprietary rating process which helps assess issuer quality over and above a company's simple rating. The team is part of the corporate debt division which comprises 15 fund managers and manages EUR 7bn3.
C share: FR0013076478
D share: FR0013076486
Legal form: French-regulated FCP (Fonds Commun de Placement)
AMF classification: Euro-denominated bonds and other negotiable debt securities
Marketing Period: up to 30/06/2016
Investment Period: up to 30/06/2016
Launch date: 25/01/2016
Maximum management charges
Subscription commission (not accruing to the fund):
not credited to the fund: zero
credited to the fund: 1% up to 31/12/2016 and zero subsequently
Recommended investment horizon: up to 31/12/2021
|Main risks: capital loss risk, discretionary management risk, risk from investing in emerging markets, credit risk, risk from investing in speculative securities, interest rate risk, liquidity risk, risk associated with derivative products and counterparty risk. The fund is classified in category 4 (C and I shares) in line with the nature of securities and geographical zones in the "objectives and investment policy" section of the key investor information document (KIID).|
February 2016. This document is non-binding and its content is exclusively for information purpose.
WARNING : The data, comments and analysis in this document reflect the opinion of Edmond de Rothschild Asset Management (France) and its affiliates with respect to the markets, their trends, regulation and tax issues, on the basis of its own expertise, economic analysis and information currently known to it. However, they shall not under any circumstances be construed as comprising any sort of undertaking or guarantee whatsoever on the part of Edmond de Rothschild Asset Management (France).
All potential investors must take prior measures and specialist advice in order to analyse the risks and establish his or her own opinion independent of Edmond de Rothschild Asset Management (France) in order to determine the relevance of such an investment to his or her own financial situation.
Regulation in each country relative to fund marketing rules is different depending on the country. The fund may be offered in a jurisdiction other than the country of registration especially for private placement if the law of such other jurisdiction allows it. If you have any doubts about the ability of marketing this fund, we invite you to contact your usual sales contact.
No fund may be offered to a person if proscribed by the law of their country of origin or any other country with respect to that person or the product concerned.
The fund and its units are not registered under the Securities Act of 1933 or any other United States regulation. They cannot be offered or sold for the benefit or on behalf of a "U.S.Person" as defined by "Regulation S".
The fund may not directly or indirectly receive subscriptions from the People's Republic of China.
The risks of this fund are described and detailed in its prospectus.
1 High yield bonds are considered as speculative instruments with a higher default risk (BBB- at Standard & Poor's or an equivalent agency or with a similar rating from our internal rating system).
2 Past performance is not a reliable indication of future returns and is not constant over time. Source : Edmond de Rothschild Asset Management (France). Data at 31/01/2016.
3 Data at 30/11/2015.