Don't bank on it: How AXA IM is dodging the problem with floating rate debt

Nicolas Trindade, manager of the AXA Sterling Credit Short Duration Bond fund, has been using in-house resources in a bid to diversify his floating rate note exposure.

As floating rate debt becomes more popular with investors in an environment of rising yields, Trindade has upped his exposure to the sub-sector from 2.5% of his fund to 8% as of end-October. But squaring this move with his cautious stance on senior bank bonds has proved more challenging, given banks' dominance of the floating rate issuance market. Accordingly, Trindade has been sourcing floating rate notes issued by non-financial corporates - though such issuance accounts for just 20% of the overall floating rate market, according to AXA estimates. "It is not easy, particularly as ...