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29 Mar 2021

Axiom European Financial Debt

Company Notes

Attractive yield from portfolio of financial debt

Axiom European Financial Debt, which was launched in November 2015, invests in subordinated debt issued by European financial institutions, seeking opportunities presented by the transitioning regulatory environment, primarily Basel and Solvency requirements. The portfolio invests across five sub-strategies in order to achieve a balance between income and capital growth: Liquid Relative Value (16% of net assets at 28 February 2021); Less Liquid Relative Value (15%); Restructuring (45%); Special Situations (4%); and Midcap Origination (26%). The fund is targeting a return of 10% per annum over a seven-year period, including an annual dividend of 6p per share. It will face a continuation vote in 2023. The intention is to propose a new seven-year strategy next year, before returning capital to shareholders looking to exit following the continuation vote.

Since launch the fund has delivered a NAV total return of +39%, outperforming both the +35% return of the ICE BofAML Sterling Financial Index and the +31% return of the Debt – Loans & Bonds peer group. It has also met its 6p per share dividend target each year, which provides a yield of 6.7% on the current share price.