In this article on investment strategies for volatile markets, Gianni Pauwels, Head of Sales Netherlands at Groupe La Française, advocates for a long-term focus on structural trends within the high-yield segment.
The world is being shaped by four structural megatrends: technological innovation, climate change, urbanization, and demographic shifts. These trends are fundamentally transforming the economy and society, driving demand for infrastructure, healthcare, housing, and innovative technologies. Companies whose business models align with these developments—while also supporting the United Nations Sustainable Development Goals (SDGs[1])—are considered particularly resilient. In the high-yield market[2], this applies primarily to companies in the technology, healthcare, infrastructure, renewable energy, and services sectors.
La Française Credit Innovation targets the four megatrends in the high yield universe. The strategy draws inspiration from thematic equity investing but applies that logic to corporate bonds. The underlying premise is that rating agencies often lag in recognizing the positive developments of high-growth companies. Consequently, companies with solid credit profiles and long-term growth potential stand to benefit from rising revenues, improved fundamentals, and eventual rating upgrades.
The investment universe is deliberately selective, focusing on companies representing the “economy of tomorrow.” US issuers currently account for more than half of the portfolio, reflecting the concentration of innovative technology and healthcare companies in that region.
Sustainability is a core component of the strategy. The fund favors companies whose business models align with the Sustainable Development Goals (SDGs) relevant to specific megatrends. Furthermore, the fund is classified as an Article 9 fund under the EU Sustainable Finance Disclosure Regulation (SFDR)[3].
The goal is to achieve an attractive risk-adjusted return while enhancing the portfolio’s resilience to market uncertainty.
Main Risks: Risk of capital loss, risk associated with discretionary management, equity market risk, risk associated with investments in small-cap stocks, liquidity risk, sustainability risk. Full risk information is available on the fund’s prospectus.
Disclaimer
Marketing communication reserved for professional investors and distributors under MiFID 2 Directive. Please refer to the prospectus and the current Key Information Document available at www.la-francaise.com. This communication does not constitute an offer or investment advice, and Credit Mutuel Asset Management declines any responsibility in case of modification, distortion, or falsification of this communication.
[1] United Nations Sustainable Development Goals
[2] High-yield bonds, also known as “speculative-grade” bonds, offer potentially higher returns and carry higher risk than investment-grade bonds.
[3] The Sustainable Finance Disclosure Regulation (SFDR) – EU 2019/2088 – offers no guarantee regarding the performance of the funds. Investment decisions must take into account all characteristics and objectives of the fund as described in the prospectus and the Key Investor Information Document (KIID) of the fund being promoted. A fund classified under Article 9 of the SFDR incorporates sustainability risks into its management, promotes social or environmental characteristics, and establishes a sustainable investment objective. A fund classified under Article 9 of the SFDR is required to invest in sustainable investments.
