While markets continue to be dominated by central banks, inflation and fears of recession, the High Yield market is entering a period of potential economic weakness in good overall shape. The credit quality of the market has improved significantly over the years, whilst leverage ratios are close to historic lows and interest coverage ratios at record highs. With attractive all-in yields and a discounted US dollar price, the valuation argument for owning High Yield at this point in the cycle is also compelling.
However, recent market volatility occurring outside the High Yield market is causing many to revise upwards their default expectations for 2023, but many of these models focus heavily on top-down factors such as tightening credit lending standards and ignore the bottom-up fundamentals, which we believe remain much more relevant in today’s market. That said, there are pockets of risk that remain and we expect the worsening economic backdrop to affect different sectors unevenly, increasing dispersion within our market and favouring an approach heavily focused on security selection.
We have a suite of High Yield strategies across the risk spectrum, able to access the opportunities that this dispersion is creating. From Short Duration High Yield with its disciplined, up-in-quality bias to Dynamic High Yield, a more concentrated strategy focused on higher yielding, smaller issue sizes, and Global High Yield offering greater regional diversification, we strongly believe that investors today would benefit from an allocation to High Yield over the medium term.
AXA Investment Managers
Matthew joined AXA Investment Managers in 2010 and is part of the London sales team. He shares responsibility for promoting the AXA Investment Managers fund range to London wealth managers and family offices. Prior to this he previously worked at Thames River Capital and New Star Asset Management.
AXA Investment Managers
James joined AXA Investment Managers in May 1999 (then the Framlington Group) and is now Head of Strategic Partnerships and Regional Sales, responsible for promoting the AXA Investment Managers Fund range. Prior to this he previously worked at HSBC Asset Management and received a BSc (Hons) in Geography from Reading University and holds the Investment Management Certificate.
Mike is the Head of US High Yield and Senior US HY Portfolio Manager with AXA IM. He is also a member of the Core High Yield and Global High Yield Working Groups, which are the teams responsible for the management of our US core and global high yield portfolios.
Since 2007, Mike has served a number of roles within the US High Yield team, including his most recent role as US High Yield Portfolio Manager. Mike joined AXA IM as a US High Yield Credit Research Analyst, covering a number of sectors including Utilities, Energy, and Healthcare. In 2010, his role expanded to include portfolio management. As one of the US Core High Yield portfolio managers, Mike is involved in the daily management of core high yield portfolios including the AXA WF US High Yield Bonds fund and a variety of other funds and mandates. As part of his role, Mike leads sector coverage of the Energy, Healthcare, Media, Utility, and Insurance sectors. Prior to joining AXA IM in 2007, he was an Analyst in the fixed income division of Bear, Stearns & Company, where he performed financial analysis and quantitative support for the Public Power group.
Mike holds a B.A. in Economics from Williams College and has the CFA professional designation.
David joined AXA IM in 2014 as a Senior Economist in the Research and Investment Strategy team, providing macroeconomic and market analysis primarily on the US and UK economies. While still fulfilling this role, since January 2019 David has also led the Macro Research Team, comprising economists in London, Paris and Hong Kong. The team provides global forecasts and analysis on macroeconomic and market developments across the world.
Prior to AXA IM, David spent four years with Lloyds Banking Group where he worked as the primary fixed income macroeconomist, with specific emphasis on the UK. Before that he spent ten years with Investec, working most recently in the Securities team providing macroeconomic advice for the Group, specialising in UK and European affairs. David initially joined Investec in the Treasury and Specialised Finance area, supporting interest rate trading activities. He started his career in the Government Economic Service in 1996, working most recently for the Debt Management Office, having initially joined in the Office of Electricity Regulation.
David holds a Master's in Economics from the University of Warwick and a Bachelor's in Economics from the University of York.