AXIOM EUROPEAN FINANCIAL DEBT: Aiming for 10% return by buying debt issued by banks to meet legal requirements
WHAT IS IT? Rather than investing in stocks, it buys debt and other instruments issued by banks to meet their legal requirements. It aims to provide investors with an annual return of about 10 percent.
WHAT DOES IT INVEST? Fund manager Gildas Surry is benefiting from shifts in regulatory regimes, looking for financial instruments issued by banks and other institutions because they have to comply with new regulations, and which may offer better returns because they need money.
The largest holdings include bonds issued by the Dutch bank Van Lanschot and the British lenders Shawbrook and Onesavings Bank.
WHAT DO THE EXPERTS LIKE? Haig Bathgate of Seven Investment says, “A yield of more than 7 percent is hard to ignore given the low interest rates.”
He adds that it trades at a discount to the underlying value of its assets.
ANY MINORITIES? It is not the easiest for investors to understand. Bathgate says, “Investors should ensure that they choose managers who have a detailed understanding of the regulations.”