Fund Rationale: Allianz Global High Yield Fund

Allianz Global High Yield Fund (the "Fund")
SGD Hedged Distribution Shares (ISIN: LU2049825206)
Fund Manager Page

Endowus has selected the Fund because it employs a strong fundamental investment process, has a disciplined downside risk management procedure, and is managed by an experienced investment team.
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Key Information

Fund Objective: Aims at long-term capital growth by investing in high yield rated debt securities of global bond markets.

Suitability: Investors who are pursuing the objective of general capital formation/asset optimisation, have basic knowledge and/or experience of financial products, and are capable of bearing a financial loss.

Cost:
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* Total Fund-level Fees include fund management fee of 1.1%.
** Endowus do not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 8 November 2016
Share Class Inception: 1 October 2019
Benchmark: ICE BofA Global High Yield Constrained

Fund AUM: SGD 109m
Source: MorningStar as of 27 May 2021. Please refer to the FMC page for the most updated AUM.

🌱EU SFDR Rating: Article 8

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 31 March 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.

Selection Criteria

Endowus has selected the Allianz Global High Yield Fund because the Strategy employs a strong fundamental investment process, has a disciplined downside risk management procedure, and is managed by an experienced investment team. The overall investment process is highly structured and systemised, and we particularly like the fact that the Fund has a focus on fundamental analysis and on using risk budget when it comes to position sizing and managing downside risk. The Fund has shown a successful track record of avoiding defaults and managing distressed positions in the portfolio and delivered superior risk-adjusted returns relative to its peers.

In addition, the Fund is managed by a stable and experienced portfolio management team, supported by a credit research team with deep bench of experience. The Fund’s lead portfolio manager is David Newman, who is the CIO of Global High Yield and has 33 years of investment experience. He set up the Global High Yield team and has been with the strategy since its inception. Together with the other two portfolio managers, they have on average 32 years of investment experience and the portfolio management team is supported by 23 credit research analysts globally. We also found, through our interactions with the portfolio management team, that there seems to be a culture of open debate and continuous learning, and we believe that these are essential characteristics an investor should demonstrate. 

Finally, we like the fact that the Fund integrated ESG factors in its fundamental analysis, and from March 10, 2021 onwards, started to apply strict exclusion list and incorporated “Climate Engagement with Outcome” initiative, which means they will engage with top emitters of the portfolio to drive corporates towards climate transition pathways. 

The Fund has a stronger European bias despite it being global in nature. There has also been an underweight on Asia. The base currency of the Fund is in Euros and the benchmark is Euro-hedged. Therefore when selecting this Fund, it will be worthwhile to consider the geographical mix and complement your portfolio with other fund selection if you prefer to have structural overweight on certain geographies. 

🌱Sustainable Investing Methodology

Allianz considers as part of its due diligence process all relevant financial risks, including all relevant sustainability risks that could have a significant negative impact on the return on an investment, in its investment decision and evaluates them on an ongoing basis. The Sustainability Risks assessment does not cover cash and deposits, derivatives and non-rated investments. Sustainability Risks are clustered as:

  • Sustainability macro risks with global relevance for all sub-funds (for example global warming and climate change).
  • Sustainability sector risks with relevance for all funds exposed to specific sectors (for example stranded asset risks for Oil & Gas sector).
  • Sustainability idiosyncratic risks on the level of individual corporate and sovereign issuers with relevance for all portfolios exposed to these issuers (for example climate transition risk)
  • Sustainability investment risks on portfolio level that derive from portfolio exposure on Sustainability macro risk, Sustainability sector risks and in particular invested Sustainability issuers.

Sustainability risks are assessed using external sustainability research data and/or internal research and analysis. Both external and internal research aims at identifying potential financial risks of an investment in securities of an issuer related to sustainability. Issuers can be corporate issuers, sovereign issuers or sub-sovereign agency issuers. Details can be found in the Risk Management Policy Statement.

All products comply with the process described above. In addition, specific investment strategies in line with Article 8 and 9 of the Sustainability-related Disclosure Regulation have features that to some extent could limit certain risks, in particular reputational, e.g. exclusions of certain industries or of the worst rated issuers.

Additionally, the Fund is managed  in accordance with the Climate Engagement Strategy, and promotes an environmental characteristic through the engagement with the top 10 carbon emitting issuers of the Fund to encourage their transition pathway to a low carbon economy by setting objectives targets which are sector specific. Top 10 carbon emitting issuers of the portfolio are ranked based upon the carbon emissions of the issuers in the portfolio for their scope 1 and scope 2 emissions data. Scope 1 aims to measure all direct emissions from the activities of a corporate or under their control. Scope 2 aims to measure all indirect emissions from electricity purchased and used by the corporate based upon the greenhouse gas protocol definition.

Allianz will ensure through the exercise of voting rights to promote good governance and advances environmental issues. Allianz will engage with issuers regarding their target settings with respect to a climate transition pathway.

Governance characteristics are assessed based on the issuer’s system of rules, practices, and processes by which it is directed and controlled.

In addition, the Strategy applies minimum exclusion criteria. The current exclusion criteria may be updated from time to time and can be consulted on the website.

For publicly-listed asset classes, environmental, social and human rights characteristics are assessed using external sustainability research data (i.e. MSCI, Sustainalytics, Vigeo and ISS ESG), and / or internal research. The sustainability research aims at assessing issuers which can be corporate issuers, sovereign issuers or sub-sovereign agency issuers. The environmental assessment covers the issuer’s environmental management and policy. The social assessment covers the issuer’s social responsibility. Business behaviour assessment covers the issuer’s trade relationships and their product safety (this does not apply for securities issued by a sovereign entity). The governance assessment covers the issuer’s system of rules, practices, and processes by which it is directed and controlled while in the case of sovereign entities the government policies are covered.

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Updated by Endowus: June 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.