HEAD-TO-HEAD: Axa vs Pimco

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The three-year performance of the Axa and Pimco funds versus their benchmark indices, according to FE data. Source: FE. In US dollars

Performance

The Axa fund’s performance is largely driven by the risk appetite of investors, according to Dobrescu.

When investors are highly risk-averse, CCC bonds tend to suffer, which explains the Axa fund’s underperformance in 2018.

Turning to the Pimco fund, given its bias toward BB names, the fund is more duration sensitive.

“So if you’re in an environment where interest rates are going up, those specific bonds might suffer more than CCCs,” she said.

Both funds underperformed their indices last year, according to FE data.

Discreet annual performance (%)

Source: FE Analytics. In US dollars.

However, Dobrescu noted that both funds have outperformed their peers and are among the best performing global high yield funds.

“Both funds have done quite well over time. Although they were hurt in 2018, their security selection was good, so they were able to compensate for that and performed better than their peers,” she said.

In terms of volatility, the Axa fund is less volatile than the Pimco fund.

Three-year annualised volatility

Source: FE Analytics

Dobrescu explained that higher-rated bonds in the high yield space tend to be more volatile than lower-rated bonds.

“The higher rated bonds are owned by more investors, so when investors want to reduce their allocation to risky assets, they tend to sell those bonds first,” she explained.

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