The fund posted a positive performance, outperforming its reference indicator over the period.
In an environment marked by a general rise in interest rates, our short positions on German and French interest rates helped to limit its impact.
In addition, the portfolio benefited from its credit carry strategies, with a positive contribution from our financial sector bonds and hedges aimed at reducing our exposure to the riskiest part of the market.
Finally, the portfolio continues to benefit from our exposure to money market instruments and, to a lesser extent this month, from our selection of Collateralized Loan Obligations (CLOs).
The relative resilience of the economy, with consumption remaining robust, particularly in the services sector, and inflation continuing to fall gradually, should enable the ECB and, to a lesser extent, the US Federal Reserve to gradually continue their monetary easing.
However, given the political and geopolitical risks and the increasingly stretched valuations on some markets, the portfolio is maintaining a balanced positioning with a modified duration that has hovered around 1.5 over the period:
On the one hand, a significant allocation to credit, mainly invested in short-term, highly-rated corporate bonds and CLOs, which offer an attractive source of carry and a low beta relative to market volatility.
On the other hand, a short position on German rates, albeit reduced at the end of the period, with the market now incorporating an optimistic rate-cutting cycle against a backdrop of large issues on the primary market at the start of the year and uncertainty surrounding the new policy being pursued in the United States.
We are also retaining protection on the credit market (iTraxx Xover), with markets trading at tight levels in an uncertain geopolitical environment.
Finally, we have allocated part of the portfolio to money market instruments, which represent an attractive source of carry with limited risk.
Europe | 86.2 % |
North America | 6.6 % |
Eastern Europe | 6.5 % |
Asia-Pacific | 0.5 % |
Latin America | 0.3 % |
Total % of bonds | 100.0 % |
Market environment