Groupama Axiom Legacy 21 has reached EUR506 million in assets under management, less than three years after the fund’s launch in 2018.
The fund focuses on the subordinated “legacy” debt universe, a sector of financial instruments that is constantly being influenced by regulatory changes across the Eurozone. Currently, the majority of the fund’s holdings are reaching maturity, meaning that they will no longer be eligible instruments by which financial institutions can reach their regulatory capital requirements, a feature of the transition from Basel II to Basel III.
This means, that 2021 is a pivotal year for Groupama Axiom as the fund will now gradually position its holdings towards bonds that mature in the years to 2025 (insurance companies as part of the transition to Solvency 2 and banks as per the changes brought by the banking package).
With an average spread of 411 basis points (as of 12/31/2020) for an average portfolio rating of BB+, Groupama Axiom Legacy 21 has significant attractions in the current credit market given the spread of the Corporate BB index stands at 250 basis points (as of the same date).
The objective of the fund is to obtain, over a recommended minimum investment horizon of four years, an annualised return equal to or higher than that of the Euribor three months +3 per cent index (after deduction of management fees).
David Benamou, Chief Investment Officer at Axiom Alternative Investments, says: “The impressive inflows seen in 2020 are testament to our investment strategy and the attractiveness of this fund’s returns. Looking ahead to 2021, with a significant majority of the Legacy bonds in the portfolio hitting regulatory maturity this year, we believe that the financial credit universe represents an incredibly exciting opportunity and believe that this fund is well positioned to take full advantage of the cycle.”
