Fixed income investors always keep a close eye on central banks’ interest rate trajectory – because the moment interest rates go up, bond prices fall. The most sensitive to interest rate changes are long term (long duration) bonds because they have more repayments remaining to maturity, and hence a higher risk of interest rates rises occurring during that time and affecting the price of the bond. It is a kind of a catch 22.
To complicate matters, inflation has increased globally and curve movements have been volatile. This has had a disproportionate effect on long-term maturity bonds, which saw much higher volatility than their short term maturity peers.
As a result, many investors have been looking to reduce risk by shortening the duration of their fixed income portfolios and searching for shorter duration bond opportunities.
Candriam Bonds Global Inflation Short Duration: what can it do?
By definition, this strategy focuses on short duration, the segment of fixed income least sensitive to interest rate changes. It also aims to mitigate the effects of rising inflation in the Eurozone.
- Shorter duration inflation linked bonds offer efficient inflation mitigation
- Higher degree of inflation protection compared to longer duration inflation linked bonds
- Global and broad inflation-linked investment universe which includes some emerging markets with good ESG scores
- A distinctly flexible and robust approach to maintaining low sensitivity to interest rates (duration -1; +6 years1)
- Distinctive features for diversified bond portfolios: ability to capture global commodity trends through complimentary FX strategies with a focus on commodity currencies
Source: Candriam, Bloomberg© - Indicative data which may change over time
Important Investment Risks
To fully understand the fund’s risk profile, we advise investors to carefully review the official prospectus and the description of the underlying risks.
Candriam Short-Duration Inflation-Linked Bonds
- Risk related to financial derivative instruments
- Emerging countries risk
- Liquidity risk
- Sustainability risk
Past performance of a given financial instrument or index or an investment service or strategy, or simulations of past performance, or forecasts of future performance does not predict future returns.
1 Indicative data which may change over time, these are not formal objectives of the fund as stated in its regulatory documentation.