Axiom 2027

Promotional communication : Before making any investment decision, please review the Key Information Document (KID) and the prospectus for the relevant fund, in particular to familiarize yourself with its characteristics, risks, and costs.

A short-term bond fund is a collective investment holding a portfolio of bonds and, depending on its mandate, other fixed-income instruments.

It generally seeks exposure to securities with relatively near maturities or limited duration. Duration takes account of the timing of a bond’s cash flows and helps assess its sensitivity to changes in interest rates.

An asset manager runs the fund and selects securities in line with the objective set out in its regulatory documents. The portfolio may include sovereign bonds, corporate bonds and, where applicable, money market instruments or comparable securities.

Investors buy units or shares in the fund rather than the individual bonds in its portfolio. The value of their holding depends on the net asset value, which may change with interest rates, issuers’ financial strength, market conditions and fees, among other factors.

Limited duration may lessen, but does not eliminate, the effect of interest-rate changes compared with a long-duration fund. It offers no capital guarantee: the value of the units may rise or fall.

Short-term bond funds may include several categories of debt securities, depending on their strategy, geographic exposure and risk profile.

The key information document (KID) and prospectus describe the fund’s investment strategy and risks. To see the portfolio’s actual composition on a given date, consult the asset manager’s publications, subject to the detail they provide.

A short-term bond portfolio may hold, in particular:

• Government or public-sector bonds;
• Corporate bonds;
• Higher-credit-quality securities, known as investment grade;
• High-yield bonds, where permitted by the mandate, generally associated with greater credit risk.

Some funds focus on euro-denominated issues; others also invest in securities denominated in foreign currencies. Without currency hedging, exchange-rate movements can affect net asset value.

The term “short-term” can cover different strategies: some funds favor bonds nearing maturity, while others primarily limit the portfolio’s duration.

It does not mean that capital is guaranteed or that the fund necessarily suits a short-term cash need. Check each fund’s strategy, recommended holding period and redemption arrangements. Its investment objective and risk indicators therefore need to be assessed individually.

Short-term bond funds remain exposed to various risks, even if their interest-rate sensitivity is often lower than that of long-maturity funds. Capital is not guaranteed and net asset value may decline.

The main risks are:

• Interest-rate risk: rising rates may reduce the value of existing fixed-rate bonds;
• Credit risk: an issuer’s creditworthiness may deteriorate or it may default;
• Liquidity risk: some securities may become difficult to trade;
• Currency risk: exposure to foreign currencies may affect returns;
• Risk of capital loss: investors may recover less than their initial investment.

Spreading investments across issuers, sectors or bond types can help limit concentration in certain risks, without removing them. A fund exposed to corporate or high-yield bonds may, for example, face greater credit risk.

However, the level of risk depends on the issuers and securities actually held by each fund; the distinction between corporate and sovereign bonds alone is not enough to compare them.

Past performance is not indicative of future performance. The KID and prospectus specify the risks applicable to the fund and their significance.

Generally, rising interest rates tend to reduce the prices of existing fixed-rate bonds. This may lower a short-term bond fund’s net asset value. Conversely, falling rates may support the value of portfolio securities, all else being equal.

The size of this response depends in particular on portfolio duration. Usually, the longer the duration, the greater the sensitivity to interest rates. All else being equal, a shorter-duration portfolio is generally less sensitive to a rate change than a longer-duration portfolio. This comparison cannot predict either fund’s overall performance.

Interest-rate movements are not the only driver of a bond fund’s performance. Changes in issuers’ creditworthiness, market liquidity, economic conditions and exchange rates, where relevant, can also play a role.

Duration, interest-rate sensitivity and the portfolio’s main characteristics are generally set out in the asset manager’s documents. They describe the fund’s exposure but cannot predict its performance.

Before investing in a short-term bond fund, assess whether it fits your investment horizon, objectives and ability to bear a decline in value. A short-duration fund is not risk-free.

It may be useful to check:

• The investment objective;
• The recommended holding period;
• Duration or interest-rate sensitivity;
• Issuers’ credit quality;
• The proportions of government, corporate and high-yield bonds;
• Applicable fees;
• The KID and prospectus.

Fees deserve particular attention: management fees and, depending on the fund, entry, exit or transaction fees. They may reduce returns after fees. The investment currency and any currency hedging should also be considered.

Read the KID and prospectus to review the strategy, risks, fees, recommended holding period and redemption arrangements. Periodic reports can add information on management and the portfolio. The ability to request redemption of units does not guarantee that their sale will be free of loss.

If you are unsure whether an investment suits your circumstances, consulting an authorized professional may be helpful.

Past performance is not indicative of future performance, and invested capital is not guaranteed.