PrintNews
PARTNER NEWS
The nordIX Anleihen Defensiv: A source of return through credit risk premiums
Date:
17. December 2024
The nordIX Anleihen Defensiv fund (bond fund), managed by nordIX AG in Hamburg, has established itself as a reliable addition to investment portfolios over the past few years. Its strict guidelines – including an average
credit rating of A – are designed to offer investors strong stability with minimal volatility. The fund’s active management aims to select the best bonds and deliver consistent returns across different market conditions.
In volatile markets and during times of uncertain interest rate movements, investors look for stable, risk-protected sources of income.
The nordIX Anleihen Defensiv fund (ISIN DE000A2QCX86 AK R / DE000A2DKRH6 AK I) uses an innovative strategy to capture credit risk premiums while systematically managing interest rate risks. Its robust structure and diversified bond portfolio make it an appealing choice for investors seeking steady returns with strong risk protection.
Recent economic developments in Germany and the Eurozone indicate that inflation has declined more sharply than expected. This provides the European Central Bank (ECB) with greater flexibility to reduce key interest rates more quickly than originally forecast. A falling inflation rate typically causes short-term interest rates to decrease more significantly than long-term rates, leading to a normalisation of the yield curve. However, a flatter yield curve – where the difference between short and long-term rates is reduced – poses challenges for banks. It makes it harder to generate profits through maturity transformation, which is the practice of borrowing short-term funds to invest in longer-term assets.
This, in turn, creates opportunities for credit risk premiums (credit spreads). These premiums represent the additional yield investors earn on corporate bonds compared to risk-free government bonds. With the expected normalisation of the yield curve and a likely return by the European Central Bank (ECB) to more accommodative monetary policy, these spreads could narrow further over time. Such a development would offer the potential for price gains on bonds.
Focus on Capturing Credit Risk Premiums
The nordIX Anleihen Defensiv fund, managed by the Hamburg-based boutique nordIX AG, aims to capitalise on this market environment by focusing on capturing credit risk premiums. Unlike many traditional bond funds, where interest rate risks play a significant role, this strategy systematically hedges such risks. By using interest rate swaps and futures, the fund ensures that rate fluctuations do not negatively impact portfolio performance.
The fund is fully dedicated to credit risk premiums, which currently offer attractive yield opportunities, particularly in the investment-grade space (bonds with high credit ratings). The fund management team invests in bonds in the primary market (new issues) and leverages credit default swaps (CDS) to exploit relative value opportunities between the cash and derivatives markets. An average rating of A and a maximum allocation of 25 percent to BBB-rated bonds provide a solid and low-risk foundation for achieving stable returns and preserving portfolio quality.
For 2025, the fund management team expects to achieve a return of just under 3 percent from money market interest rates. This is complemented by credit spreads, which are anticipated to contribute an additional 120 basis points. A potential tightening of spreads represents another possible source of returns, with the fund’s spread duration typically ranging between 6 and 7.
The active management strategy aims to minimise credit risks through detailed credit and sector analysis. Additionally, the use of credit default swaps (CDS) and the implementation of targeted hedging strategies have historically generated additional returns for investors.
The nordIX Anleihen Defensiv fund offers an appealing opportunity to benefit from solid, low-risk bonds in the current market environment.
The nordIX Anleihen Defensiv fund (ISIN DE000A2QCX86 AK R / DE000A2DKRH6 AK I) uses an innovative strategy to capture credit risk premiums while systematically managing interest rate risks. Its robust structure and diversified bond portfolio make it an appealing choice for investors seeking steady returns with strong risk protection.
Recent economic developments in Germany and the Eurozone indicate that inflation has declined more sharply than expected. This provides the European Central Bank (ECB) with greater flexibility to reduce key interest rates more quickly than originally forecast. A falling inflation rate typically causes short-term interest rates to decrease more significantly than long-term rates, leading to a normalisation of the yield curve. However, a flatter yield curve – where the difference between short and long-term rates is reduced – poses challenges for banks. It makes it harder to generate profits through maturity transformation, which is the practice of borrowing short-term funds to invest in longer-term assets.
This, in turn, creates opportunities for credit risk premiums (credit spreads). These premiums represent the additional yield investors earn on corporate bonds compared to risk-free government bonds. With the expected normalisation of the yield curve and a likely return by the European Central Bank (ECB) to more accommodative monetary policy, these spreads could narrow further over time. Such a development would offer the potential for price gains on bonds.
Focus on Capturing Credit Risk Premiums
The nordIX Anleihen Defensiv fund, managed by the Hamburg-based boutique nordIX AG, aims to capitalise on this market environment by focusing on capturing credit risk premiums. Unlike many traditional bond funds, where interest rate risks play a significant role, this strategy systematically hedges such risks. By using interest rate swaps and futures, the fund ensures that rate fluctuations do not negatively impact portfolio performance.
The fund is fully dedicated to credit risk premiums, which currently offer attractive yield opportunities, particularly in the investment-grade space (bonds with high credit ratings). The fund management team invests in bonds in the primary market (new issues) and leverages credit default swaps (CDS) to exploit relative value opportunities between the cash and derivatives markets. An average rating of A and a maximum allocation of 25 percent to BBB-rated bonds provide a solid and low-risk foundation for achieving stable returns and preserving portfolio quality.
For 2025, the fund management team expects to achieve a return of just under 3 percent from money market interest rates. This is complemented by credit spreads, which are anticipated to contribute an additional 120 basis points. A potential tightening of spreads represents another possible source of returns, with the fund’s spread duration typically ranging between 6 and 7.
The active management strategy aims to minimise credit risks through detailed credit and sector analysis. Additionally, the use of credit default swaps (CDS) and the implementation of targeted hedging strategies have historically generated additional returns for investors.
The nordIX Anleihen Defensiv fund offers an appealing opportunity to benefit from solid, low-risk bonds in the current market environment.
Disclaimer
©2024. All rights reserved. This publication is exclusively intended for the use of professional and semiprofessional investors and is not intended for private investors. This publication is for information purposes only. The information provided should not be taken as recommendation or advice. All information is based on publicly available sources which we consider to be reliable. We cannot guarantee the accuracy or completeness of the information, and no statement in this publication is to be understood as such a guarantee. The opinions expressed in this publication are subject to change without notice. Information on historical performance do not allow conclusions about or otherwise guarantee future performance. The sole basis for the acquisition of units is the Fund documentation for the respective investment fund, which is available free of charge at Universal Investment and in the Internet at www.universal-investment.com.
A summary of your investor rights can be found at www.universal-investment.com/en/Corporate/Compliance/Investor-Rights. In addition, we would like to point out that Universal Investment may, in the case of funds for which it has made arrangements as management company for the distribution of fund units in other EU member states, decide to cancel these arrangements in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU, i.e. in particular by making a blanket offer to repurchase or redeem all corresponding units held by investors in the relevant member state.
An investment in a Fund is a risky investment and investors in the Fund may suffer a loss in value up to an amount equivalent to a total loss of the entire capital invested in the Shares in the Fund. Accordingly, potential investors should have adequate and sufficient liquidity to economically bear a total loss of their investment in the Fund. When deciding to invest in the advertised fund, the investor should also take into account the sustainability aspects regarding the characteristics or objectives of the advertised fund as set out in the prospectus. Further information on the sustainability aspects of the fund can be found in the web document, the sales prospectus and the pre-contractual product information. This can be found at: https://fondsfinder.universal-investment.com/en/DE/Funds/DE000A2QCX86/downloads.
A summary of your investor rights can be found at www.universal-investment.com/en/Corporate/Compliance/Investor-Rights. In addition, we would like to point out that Universal Investment may, in the case of funds for which it has made arrangements as management company for the distribution of fund units in other EU member states, decide to cancel these arrangements in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU, i.e. in particular by making a blanket offer to repurchase or redeem all corresponding units held by investors in the relevant member state.
An investment in a Fund is a risky investment and investors in the Fund may suffer a loss in value up to an amount equivalent to a total loss of the entire capital invested in the Shares in the Fund. Accordingly, potential investors should have adequate and sufficient liquidity to economically bear a total loss of their investment in the Fund. When deciding to invest in the advertised fund, the investor should also take into account the sustainability aspects regarding the characteristics or objectives of the advertised fund as set out in the prospectus. Further information on the sustainability aspects of the fund can be found in the web document, the sales prospectus and the pre-contractual product information. This can be found at: https://fondsfinder.universal-investment.com/en/DE/Funds/DE000A2QCX86/downloads.
