Floating Rate Notes, the sweet spot in fixed income in a rising rate environment
"In today’s environment affected by upward inflationary pressures and the prospect of future interest rate hikes by central banks, La Francaise AM offers a global, cross-over credit strategy, focused mainly on Floating Rate Notes (FRNs): La Francaise Carbon Impact Floating Rates.
Thanks to attractive technical features, FRNs issued by corporates and banks exhibit very limited interest rate sensitivity and a much lower level of volatility compared to fixed rate bonds, which is a clear benefit to a diversified asset allocation in the fixed income universe.
The fund’s exposure in terms of ratings (Investment Grade and High Yield), geographies (OECD countries) and sectors (corporates and banks) seeks to capitalize on La Francaise AM’s credit expertise and strongest credit convictions through investments in FRNs, the systematic hedging of foreign exchange risks and a long-term diversification objective of approx. 130 issuers.
Furthermore, bond picking is subject to extra financial filters based on La Francaise AM exclusion policy (coal, tobacco, controversial weapons), on ESG filters (exclusion of 20% issuers with the lowest ESG scores in the investment universe) and on Carbon Transition analysis (exclusion of Laggards i.e. companies that have not begun their transition) with a commitment to a portfolio carbon footprint being at least 50% lower than its investment universe.
Therefore, La Francaise Carbon Impact Floating Rates is classified “Article 9” under the Sustainable Finance Disclosure Regulation and has received the SRI label in France."