Axa's Hayes ups risk exposure in corporate bond fund

13 August 2012 | By Gary Jackson

Nick Hayes has been introducing more risk into the £161.7m Axa Sterling Corporate Bond fund through increasing exposure to corporate debt in the eurozone periphery.

Hayes upped the fund’s cash weighting to about 6 per cent over June in the expectation that the volatility of May would continue. However, the manager has since cut this to 2 per cent.

Over the course of July, Hayes added “quite a bit of risk” to the fund, with eurozone periphery corporate debt being one area the manager is finding “quite attractive”.

“Corporate peripheral debt is an area we broadly avoided for the first five or six months of the year but we are starting to add some of the more shorter-dated names,” he says.

The fund’s exposure to corporate peripheral debt has been built up to about 4 per cent. Hayes would be reluctant to take the weighting to corporates on the periphery to more than 8 per cent owing to concerns over liquidity.

Hayes’ interest has focused on short-dated bonds from Spanish and Italian utilities and telecommunications names, with Spain’s biggest telecommunications provider Telefónica being recently bought for the portfolio.

“If you look at Telefónica paper, pretty much across the curve you are not getting a high yield pick-up in terms of spread when you move from very short-dated to medium and long-dated,” he says.

“I would rather own the really short-dated stuff that has got much less to run to maturity with quite a big spread.”

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