Alternatives

Traditionally, most credit investors have been focused on public bond markets – which are a major channel for financing corporates and consumers’ debt – but only represent a limited part of the credit universe. 

Structural changes in the credit market have opened up new opportunities for investors to broaden their credit allocation beyond traditional bond investing.

Our agile approach helps us quickly adapt to the risk and return needs of our clients. And our conviction-led approach to portfolio construction means our team can offer tailored investment solutions for each type of asset class.

Why consider leveraged loans & private debt?
Leveraged loans are a way to get exposure to high yield private corporates (companies that are privately held and may offer stocks to employees that aren't publicly available). 

They generally provide protection because of low interest rate sensitivity due to floating interest rates (where there's no fixed rate of interest and rates can move with markets). They can also offer some protective features against downside risks, like seniority (the order of repayment in the event of a sale or bankruptcy of the issuer) and loan covenants that require the borrower to fulfil certain conditions and limit some actions.

Our strategy
We have a stable team of experienced portfolio managers and sector analysts with complementary backgrounds (private equity, rating agencies, banks, asset managers) and a local presence in both the European and US markets.

The Leveraged Loans & Private Debt team has a 15+ years track record of transactions across the open-ended funds, mandates, and Collateralized Loan Obligations (CLOs) it manages, including more than 350 leveraged loans investments in the past two years alone⁹ .

Why collateralized loan obligations?
Collateralized Loan Obligations (CLO) allow investors to receive scheduled debt payments from underlying corporate loans which are secured by assets like share pledges, intellectual property, patents, real estate, and equipment. CLOs offer exposure to most sectors of the economy, like Healthcare, Food, Consumer Goods, and Basic Materials. 

These types of investments tend to offer a unique opportunity to move up and down the capital structure (the debt/equity ratio used by a company to finance its overall operations and growth), to diversify geographically, and to expand the variety of underlying assets.

Our strategy
We're an experienced investor in CLOs with a solid track record, having invested in CLO tranches since the inception of the market in 1999 and managed CLO investment strategies through cycles. Today we are one of the largest and most experienced European non-bank investor in CLOs. 

Our 11th US CLO was closed, bringing AXA IM’s total CLO assets under management to €5.8 billion as of 31 December 2019.

Why ABS & mortgages?
Asset-backed securities can provide a high level of diversification compared to traditional fixed income securities like corporate and government bonds. 

They can enable investors to finance real-economy assets that produce predictable cash-flows, such as residential mortgages or commercial loans, and can be an alternative to corporate debt.

Our strategy
We focus on direct investment in prime, whole loan mortgages and provide long-term, secured exposure – especially fit for insurance and pension purposes. The team has a 15+ years track record in the management of Asset Backed Securities across the entire rating spectrum with different collateral type both in Europe and in the US.

Why bank capital transactions?
As regulatory changes pressure banks to strengthen their capital and adapt their business models to maintain their lending capability, Bank Capital Transactions can offer a solution for banks to release capital and improve their capital ratios.

Our strategy
These transactions represent an opportunity for investors to diversify and potentially increase their credit portfolio returns by accessing asset classes, geographical exposure, and idiosyncratic credit exposure that used to be the bread and butter of banks.

Why insurance linked securities?
ILS investments offer (re)insurers the opportunity to transfer some of their risks to capital markets, providing them with an alternative to the traditional reinsurance market.

The return on ILS depends on the occurrence of a specific insurance event. This can be related to non-life risks such as catastrophe bonds, or life risks such as embedded value, extreme mortality, or healthcare risks. 

ILS are available both in cash and synthetic format and aim to offer a powerful tool of risk diversification with reduced dependence on economic factors and a generally low correlation with other assets.

Our strategy
Informed by our long history of pricing reinsurance contracts, we take a three pillar approach to investing in insurance-linked securities. The first pillar is a qualitative analysis of the instrument, the second involves quantitative analysis and risk modelling, and the third comprises sophisticated pricing models.

Why impact investing?
Impact investing goes further than integrating environmental, social and governance (ESG) criteria and excluding certain assets from portfolios. It covers a broad range of complex social and environmental objectives that aim to build a better future.

We have strong credentials in this area, having launched our first societal impact mandate in 1998 to help address unemployment. We now manage a variety of impact strategies, ranging from private equity investments to green and social bonds, which look to provide solutions relating to issues such as healthcare, climate change, and biodiversity.

Our strategy
Our approach to impact investing has clear, demonstrable objectives – and financial targets are not token. We aim for competitive, market rate returns. 

Through impact investing, we want to enhance long-term returns through the allocation of capital to take advantage of sustainability-related opportunities within large, addressable markets. 

We also aim to drive impact by leveraging our investor rights to influence companies through engagement.

Why multi asset?
Viewing lending as an activity that finances the economy opens up the breadth and depth of possible types of financing. Beyond traditional forms of credit, the spectrum of possible loans includes instruments to fund the building of roads and public services (infrastructure debt) or fund the acquisition, development, or construction of commercial property (commercial real estate debt) or residential property (residential mortgages). 

Alternative forms of credit can also be used to help insurance companies manage their risk (e.g. insurance-linked securities), provide fast growing small and medium-size companies with refinancing opportunities, enable private equity companies to build up a portfolio of investments (leveraged loans), and even support individual consumers (Dutch mortgages).

Our strategy
Our multi asset investing strategies can allow investors to access additional yield, diversify away from a traditional growth portfolio, or diversify within a traditional fixed income portfolio by gaining exposure to consumer credit, deeper corporate credit, and real assets – in one solution.

We actively allocate across regions, asset classes and sectors, rebalancing the portfolio to improve carry and in reaction to changing market conditions.