Axiom Obligataire

Promotional communication. Before making any investment decision, please consult the key information document (KID) and the prospectus of the relevant fund, in particular in order to review its characteristics, risks and costs.

A bond fund is a collective investment invested primarily in bonds, that is, debt securities issued by governments, companies or other entities. Investors subscribe for units or shares in the fund and thus entrust the selection and management of the investments to a management company.

The bond portfolio may include many issuers, maturities and levels of risk. This diversification may reduce the impact of the default of a particular issuer on the portfolio, without however eliminating the risks, including the risk of capital loss.

The value of the units or shares of a bond fund may rise or fall, depending on changes in interest rates and in the credit quality of the issuers.

Bond funds may be classified according to the nature of the bonds in which they invest.

• Some focus on government bonds, while others concentrate on corporate bonds.
• They may also differ according to the credit quality of the issuers. So-called investment grade bonds generally have a better credit rating than high yield bonds, which carry higher credit risk. A high rating does not, however, eliminate the risk of issuer default.
• Other strategies differ by their duration (their sensitivity to changes in interest rates) their geographic area, their currency or their time horizon.

A target maturity bond fund generally aims for a target maturity date and invests in a bond portfolio whose maturities are selected in line with that horizon, according to the strategy defined in its prospectus. That target maturity date does not, however, constitute a guarantee of the capital invested.

A bond fund involves a risk of capital loss. Its level of risk depends in particular on its strategy, the instruments held and market conditions. The risks presented below are not exhaustive and must be assessed in light of the KID and the prospectus of the relevant fund.

• Interest rate risk refers to changes in the value of bonds when interest rates change. As a general rule, the value of a fixed-rate bond falls when rates rise, and vice versa.
• Credit risk refers to the risk of loss linked to a deterioration in an issuer’s credit quality or to its inability to meet its financial commitments. A deterioration in its creditworthiness may lead to a fall in the value of its bonds, or even a partial or total loss in the event of default.
• Liquidity risk may arise when certain securities are difficult to buy or sell at satisfactory prices, particularly during periods of market stress.
• Currency risk may also exist when the fund is exposed to assets denominated in another currency and that exposure is not hedged or is onlypartially hedged.
• Inflation risk refers to the risk that an increase in prices reduces the real value of the income or capital resulting from the investment.

A bond held directly may provide, depending on its characteristics, for repayment of its face value at maturity, subject in particular to the issuer’s ability to meet its commitments.

By contrast, a bond fund generally has neither the maturity guaranteeing repayment of capital nor any guarantee of recovering the amount initially invested.

Interest rates are one of the main factors influencing the value of a bond portfolio. As a general rule, when market rates rise, the value of fixed-rate bonds already issued tends to fall. Conversely, a fall in rates may support their valuation.

The extent of this reaction depends in particular on the duration of the portfolio, that is, its sensitivity to changes in interest rates. All else being equal, the higher the duration, the more strongly the value of the fund is likely to react to a change in rates.

However, the performance of a bond fund does not depend solely on rates: changes in the perceived creditworthiness of issuers, market conditions or liquidity may also influence its value.

Before investing in a bond fund, several characteristics should in particular be examined: its management strategy, the categories of bonds held, their credit quality, the duration of the portfolio, any currency exposure, as well as the applicable fees.

It is also important to take into account the recommended holding period, the fund’s level of risk, its investment objectives, your risk tolerance and your ability to bear a possible capital loss.

The key information document (KID) makes it possible in particular to review the main characteristics of the fund, its risk indicator, various performance scenarios and its costs.

The KID must be provided or made available in accordance with the applicable regulations before subscription. The prospectus and, where applicable, the fund’s other regulatory documents should also be consulted in order to understand in particular its strategy, risks and fees.