Edmond de Rothschild

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EdR Fund Floating Rate Credit Corporate bonds

Corporate bonds
Change in NAV (15/11/2018)
97.64 EUR
Benjamine  NICKLAUS–LU1781814832–
Benjamine NICKLAUS
Léo ABELLARD–LU1781814832–
Léo ABELLARD
The identity of the managers presented in this document may change during the life of the product.
Risk and reward profile (1)
1234567
Recommended holding period
Between 12 and 24 months
97.64 EUR
Change in NAV (15/11/2018)
2
1234567
Risk and reward profile
Between 12 and 24 months
Recommended holding period
Change in NAV (15/11/2018)
97.64 EUR
Risk and reward profile
1234567
Recommended holding period
Between 12 and 24 months
Benjamine NICKLAUS  
Léo ABELLARD  
The identity of the managers presented in this document may change during the life of the product.
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Investment objective

The Sub-Fund's investment objective is to outperform its benchmark, net of management fees, over an investment horizon of one to two years, through a portfolio representing investment opportunities present on the short-term corporate credit markets.

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Commentary 31/10/2018

October saw credit spreads widen significantly both in Europe and in US, making it one of the worst month of the year. The decompression between BBB and A credit spreads has been strong. Primary market issuance has been subdued in comparison with the rest of 2018 as market volatility forced many issuers to wait for a better window. Investment grade corporate spreads ended the month 10 bps higher in the US and 15 bps higher in the Eurozone. In terms of sector, Autos were the main underperformers both in US and Europe. Concerns over the potential trade war with China, combined with fears of a slowdown in global growth led investors to question central banks' forward guidance. The probability of the a US rate hike in December fell to 70% at the end of the month (from above 90% in December). Regarding the ECB, there was no surprise at the October meeting with the deposit rate left unchanged at -0.4% and policy guidance re-affirmed. European High Yield spreads widened by 52 basis points versus government bonds and thus posted a -0.97% loss over the month. In this context, lower rated bonds sharply underperformed BB's. All sectors had a negative performance excepted Media which posted a 0.3% of total return. Peripheral issuers were at the centre of attention this month. Italian banks suffered from the uncertain path facing the country's debt and its first complicated exchanges with the European Commission on its budget. Strong hikes in the 10-year Italian bond yield (to levels not seen since 2014) troubled investors. However, the market seemed modestly reassured by the rating agencies decisions: Moody's downgraded Italy's sovereign rating by one notch to but kept its outlook stable (Baa3 stable), while S&P downgraded its only it's outlook, to negative (BBB neg). Portugal has moved back into the Investment Grade category, with Moody's being the last agency to lift the country's rating to Baa3. Given the climate of weakness facing issuers in Italy and Spain, spreads have widened. The somewhat inconclusive negotiations on Brexit, and trade tensions have also impacted the market. In particular, the insurance segment underperformed, with insurance perpetuals widening 44 bps. Euro CoCos were at -1.39% against -1.03% for those in USD. But there was a modest rally at October's end, in the wake of the rating agencies' recent announcements. The reporting season began with the results from Scandinavian, Spanish, Swiss and UK banks. Earnings were above the consensus at Lloyds, UBS and Santander, but Deutsche Bank and Nordea proved rather disappointing. The primary market was pretty lack-lustre. Lloyds issued an AT1 bond with 7.5% coupon for $1.5 billion. But Aegon (insurance) has postponed its issuance of a Restricted Tier 1 bond, citing unfavorable market conditions.

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Fund information

Inception Date (Fund)
07/01/1999
Inception Date (Part)
03/04/2018
Legal form
SICAV
Benchmark
EURIBOR EUR 3M
250BP
Currency (fund)
EUR
Currency (share class)
EUR
Distribution Policy
Accumulation
Valuation frequency
Daily
Minimum initial investment
1 Share
ISIN Code
LU1781814832
AuM (fund)
156 M (EUR)
Regulatory authority
CSSF
Management company
Edmond de Rothschild Asset Management (Luxembourg)
Delegated Management Company
Edmond de Rothschild Asset Management (France)
Incorporation
Luxembourg
Maximum management fee
0,600 %
Current management fee
0.600 %
Subscription and redemption conditions
Daily before 12.30 am C.E.T. on day's net asset value
Subscription fee
1.00 % max
Performance fee
15,000 %

Fund documentation

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(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.

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