risks.

The following risks may be materially relevant but may not always be adequately captured by the summary risk indicator and may cause additional loss: Credit risk, Liquidity risk and Concentration risk.

Fallen Angels Recovery

rethink high yield investment.

 

Our Fallen Angels Recovery strategy offers investors attractive risk-adjusted return potential from high yield investing, throughout market cycles. We do this by taking a global, research-driven, and importantly an active approach.

philosophy.

By investing in fallen angels, namely bond issuances which are downgraded from Investment Grade ("IG") to High Yield ("HY"), we believe these can offer a more favourable risk/return profile than standard HY bonds– both during market recoveries and in more benign markets.

90% of the strategy’s universe is rated BB, which we believe to be a credit sweet spot for value. When downgraded, fallen angels tend to offer higher spreads than BB rated peers due to forced selling pressure.

Much of a fallen angel’s value is influenced by this selling pressure as a bond’s downgrade nears, accelerating when that date hits, but often recovering within a two-year period. It is typically these market overreactions that we seek to exploit, looking to deliver convex high-yield exposure.

In economic slowdowns, such as that potentially expected in the coming months, downgrades can be more frequent, leading to increased fallen-angels supply and creating more investment opportunities for our experienced credit analysts to uncover.

why invest?

universe.

Through active credit management, our focus is on exploiting the ‘valuation over-reaction’ of bonds on their way to being downgraded to HY.

By identifying and exploiting inefficiencies at issuer and issue level through systematic top-down Lombard Odier Investment Management (LOIM) research, we seek to unearth these opportunities.

Further supported by bottom-up contribution by credit analysts to enhance returns, we then look to avoid so-called ‘falling knives’ and reduce credit risk.

investment team.

LOcom_AuthorsAM-Parker.png

Ashton Parker
Lead Portfolio Manager
Head of Credit Research

locomauthorsam-collet (LOcom_AuthorsAM-Collet) Jérôme Collet
Senior Portfolio Manager 
Head of Beta Management

LOcom_AuthorsAM-Maitra.png

Anando Maitra
Portfolio Manager 
Head of Systematic Research

LOcom-AuthorsAM-Yung.png

Denise Yung
Portfolio Manager
Crossover Credit

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insights.

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The systematic aspect of our fallen angels recovery strategy aims to capture relative value in four key ways in order to avoid potential falling knives. 

important information.

Lombard Odier Funds (hereinafter the “Fund”) is a Luxembourg investment company with variable capital (SICAV). The Fund is authorised and regulated by the Luxembourg Supervisory Authority of the Financial Sector (CSSF) as an Undertaking for Collective Investments in Transferable Securities UCITS under Part I of the Luxembourg law of the 17 December 2010 implementing the European directive 2009/65/EC, as amended (“UCITS Directive”). This marketing document relates to “LO Funds – Fallen Angels Recovery,” a Sub-Fund of Lombard Odier Funds (hereinafter the “Sub-Fund”). The Management Company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management 
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The Sub-Fund is not appropriate for Belgian retail investors unless the investment subscription is more than EUR 250,000. Please contact your tax advisor to identify the iBelgian tax “TOB” (“Taxe sur les Operations Boursières”) on your transactions, as well as the impacts of the withholding tax (“Précomptes mobiliers”). Lombard Odier has an internal Complaints Management Service. You can lodge a claim via your Relationship Manager or directly to Lombard Odier (Europe) S.A. Luxembourg, Belgium Branch, Claim Management Service, Avenue Louise 81, Box 12, 1050 Brussels, Fax: (+32) 2 543 08. Alternatively you can address your complaint free of charge to the national complaint service in Belgium, OMBUDSMAN: North Gate II, Boulevard du Roi Albert II, n°8 Boîte 2 2, 1000 Brussels, Tel: (+32) 2 545 77 70, Fax : (+32) 2 545 77 79, Email: Ombudsman@Ombusfin.be. France – Centralising agent: CACEIS Bank. Germany – German Information and Paying agent: DekaBank Deutsche Girozentrale. 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