The Sub-Fund's objective is to achieve optimum long-term capital growth by investing in debt securities traded on regulated capital and money markets. In particular, the Sub-Fund aims to outperform the index.
Central banks are still continuing slowly down the path of exiting the path of ultra-accommodative policy. In the US, a rate hike in September has been well telegraphed by the FED and a second rate hike in December is partially priced in by investors, especially given the excellent economic statistics released in August. Notably, US GDP grew at an annualized rate of 4.2%, and consumer confidence numbers were strikingly high. No specific news regarding the European Central Bank came out in August, with investors focusing on the September meeting. The ECB will halve its asset buying program (from EUR 30bln to 15bln per month) from September. The Bank of Japan was rumored in early August to have been planning to signal a less expansive policy , but continuing weak inflation seems to have prompted Governor Kuroda to change his mind. While the news has not been confirmed, it reinforced the hawkish investors' sentiment after the BoJ set a more flexible target on 10year government bond yield in July, allowing this latter to rise up to +0.2%. Following a significant tightening in July, global corporate spreads drifted slightly wider in August on the back of renewed geopolitical headlines (US-China trade tensions, budget talks in Italy, and especially the currency crisis in Turkey and Argentina). This widening was despite the strong earning season results and relatively quiet primary issuance activity. However performances of EUR and US IG corporate markets were positive thanks to the lower yields in benchmark rates. US IG corporate market outperformed the EUR IG corporate market over the period. 10 year IG corporate spreads rose 8 basis points in the US and 12 basis points in the Eurozone. US High Yield continued its strong resilience, with the CDX only rising by 3, whereas the EUR Crossover index rose by 19.
(1) The rating grades the funds on a scale from 1 to 7. This rating system is based on the average fluctuations of the net asset value over the past five years. It corresponds to the variation range of the portfolio upwards and downwards. If the net asset value is less than 5 years old, the rating is determined by other regulatory calculation methods. Historical data such as those used to calculate the rating may not be a reliable indication of the future risk profile. The current category is neither a guarantee nor an objective. Category 1 does not signify a risk-free investment.