Carbon transition global short duration bonds
An intermediate step out of cash with limited drawdowns and volatility, and an explicit decarbonisation objective.
The opportunity
A better return than cash
Short-dated bonds generally offer higher yields and greater potential returns than cash due to their longer maturity.
Low duration and volatility
Helps to mitigate the negative impact of rising government bond yields and widening credit spreads, reducing drawdowns during market downturns compared to longer-dated bonds.
Natural liquidity flow
Maturing bonds and coupon income provide a steady stream of liquidity, that can be used to implement active views without incurring additional trading costs.
Decarbonisation objective
Setting an explicit decarbonisation objective and integrating climate criteria when analysing issuers is a powerful way to not only mitigate climate risks but also to benefit from the transition opportunities.
Strategy highlights
Credibility
The fund encapsulates the best ideas of our existing suite of 11 local short duration strategies to build a truly global portfolio. The team was recognised with the Short Dated Credit Manager of the Year at the Professional Pensions Investment Awards 2023.
Sustainability
We use our extensive analyst resource and proprietary Net Zero Alignment Colours Framework to monitor issuers and portfolio decarbonisation. Portfolio construction favours more-aligned over less-aligned issuers and uses client flows and re-investments to rebalance carbon exposure over time.
Dynamic
The fund benefits from global diversification and dynamic asset allocation across the full short-dated fixed income spectrum (sovereign, investment grade, high-yield, hard-currency emerging markets). The fund aims to provide an attractive yield while limiting drawdowns and overall volatility.
Sustainability Disclosure Requirements
The FCA’s Sustainability Disclosure Requirements (SDR) help investors to find products that match their own sustainability requirements. We adopted the Sustainability Improvers label for the AXA Carbon Transition Core Credit Fund in May 2025.
As part of the SDR regulations, fund managers have to produce a report for all funds that include sustainability or environmental, social and governance (ESG) considerations in their investment approach. For funds that have adopted a sustainability label, this includes data to show how effectively they are achieving their goal. View the fund’s SDR report and other key information here.
Investment risks
Investments are subject to market fluctuations and other risks inherent to investing in securities. The value of investments and the income they generate may rise or fall and it is possible that investors may not recover their initial investment.
- Counterparty Risk
- Interest Rate Risk
- Liquidity Risk
- Credit Risk
- Carbon transition risk
For a complete description and definition of the strategy’s generic and specific risks, please refer to the Prospectus and KIID.
Important information
Marketing communication. For professional investors only.
Past performance or achievement is not indicative of current or future performance. Performance is calculated net of fees unless otherwise stated.
Any views expressed here are those of the author as of the date of publication, based on available information, and subject to change without notice. This material does not constitute investment advice.
Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. There is no guarantee that the performance objective will be achieved.
Environmental, social and governance (ESG) investment risk: The lack of common or harmonised definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, (the Sub-Fund’s) performance may at times be better or worse than the performance of relatable funds that do not apply such standards.
Fixed income sub-funds may be exposed to other risks defined below:
CAPITAL LOSS RISK: The value of the investments in Financial Instrument(s) and the returns generated by the described funds may go down as well as up. Investors may not get back the amount they originally invested.
INTEREST RATE RISK: The value of an investment may be affected by interest rate fluctuations. Interest rates may be influenced by several elements or events, such as monetary policy, the discount rate, inflation, etc.
CREDIT RISK: This is the risk that may derive from the rating downgrade of a bond issuer to which the sub-funds are exposed, which may therefore cause the value of the investments to go down. Sub-funds investing in high-yield bonds present a higher than average risk due to the greater fluctuation of their currency or the quality of the issuer.
COUNTERPARTY RISK: This risk relates to the quality or the default of the counterparty with which the Management Company negotiates, in particular involving payment for/delivery of financial instruments and the signing of agreements involving forward financial instruments. This risk is associated with the ability of the counterparty to fulfil its commitments (for example: payment, delivery and reimbursement). This risk also relates to efficient portfolio management techniques and instruments. If counterparty does not live up to its contractual obligations, it may affect investor returns.
MMFs ARE NOT GUARANTEED INVESTMENTS. An investment in MMFs is different from an investment in deposits, there is a risk that the principal invested in an MMF is capable of fluctuation. The MMF does not rely on external support for guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share. The risk of loss of the principal is to be borne by the investor.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INVESTMENT RISK: The lack of common or harmonized definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, the Sub-Fund’s performance may at times be better or worse than the performance of relatable funds that do not apply such standards.
This is not an exhaustive list of risks. For a full description of risks associated with each fund, please consult a client relationship manager or the global BNP Paribas Asset Management website: staging.bnpparibas-am.co.uk.