AXA Investment Managers (AXA IM) has launched a new type of share class which aims to reduce the downside risks faced by equity investors. The SolEx share class is designed to provide equity exposure to Eurozone companies while at the same time, partially mitigating the impact of sudden and extreme equity market downturns, through a proprietary overlay strategy.
Gilles Dauphiné, Head of Insurance Solution Management within AXA IM’s Investment Solutions team, says: “The SolEx share class will initially be available in the AXA World Fund Framlington Eurozone and will later be offered through other equity funds in the AXA IM World Fund range. We have designed this share class specifically for institutional investors, in order to enable them to participate in the returns from active equity management strategies whilst limiting the impact of a market drawdown. We make this possible through an overlay strategy which involves a range of simple derivatives.”
The AXA WF Framlington Eurozone is managed by Gilles Guibout and invests in dynamic companies domiciled or carrying out a significant part of their activity in the Eurozone. The focus is on companies which have the potential to achieve above-average profitability and cash generation, trading at an attractive valuation, across all market capitalisations. Investors in the AXA WF Framlington Eurozone will now be able to choose between two different types of share class; standard shares and SolEx shares designed to mitigate large equity market drawdowns. Once they have made their initial investment, investors have the ability to change from one type of share to the other, depending on their objectives and their strategy.
The SolEx strategy is monitored daily by AXA IM’s Investment Solutions team who readjust the overlay opportunistically according to market conditions, thereby minimising the derivatives roll cost and avoiding frequent rebalancing through an internal methodology. AXA IM’s Investment Solutions team has a specialist knowledge of derivatives stemming from the asset-liability management solutions it has been implementing for institutional investors since 1997, managing a notional value of EUR88 billion in derivatives for major hedging programs.
The AXA WF Framlington Eurozone SolEx share class which is for institutional investors only, launched on 22 November 2011; the fund is a UCITS III compliant SICAV domiciled in Luxembourg. The share class is not currently registered for sale in any other jurisdiction other than Luxembourg and AXA IM is considering registration across a number of countries in Europe.
