BBB-BB Fundamental “Crossover”:

An investment grade strategy enhanced by crossover.

Our crossover Sub-Funds aim to build a corporate credit portfolio with an average investment grade rating. We enhance yield by prudently selecting crossover bonds rated BBB to BB. We believe the crossover space can provide attractive returns in relation to investment grade, while seeking to avoid the more pronounced risk of lower-rated high yield.1

 

sub-fund information.

Click here for more information on LO Funds - Global BBB-BB Fundamental

Click here for more information on LO Funds - Euro BBB-BB Fundamental

 

Crossover: a strategic market segment.

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USD 6.5 trillion market 
The crossover segment is large, diverse and growing, forming a stable and key part of the corporate bond universe2.
Higher risk-adjusted returns over time 
Global crossover credit has provided higher returns compared to investment grade bonds over the past 20 years3.
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Improving fundamentals
BBB to BB issuers tend to improve their credit quality relative to other rating categories4.  

Lower risk than high yield 
Historically, the crossover segment has shown lower drawdown risk than equities or high yield credit5.

 

 

Why invest?

A continuous search for sustainable bond opportunities.

We believe adding crossover bonds to an investment grade portfolio offers the best of both worlds: improved returns with limited risks.

 

Focus on quality: We research both financial and extra-financial metrics when assessing fundamental credit quality, and allocate issuers’ weights accordingly. 

High conviction: The portfolio is managed actively across the crossover space, aiming to generate higher risk-adjusted return potential compared to traditional investment grade benchmarks. 

A pioneer since 2010: A seasoned team of 12 fixed income specialists support an innovative investment approach that separates alpha generation from benchmark replication.

 

Adding crossover bonds

Rising stars are improving credits that are likely to be upgraded from high yield to investment grade. 

Fallen angels arise when investment grade bonds are first downgraded. Forced sales can push prices below market value, resulting in higher yields with less credit risk than lower-rated bonds. 

Incorporating crossover bonds in an investment grade credit portfolio could therefore improve its overall risk-return profile and increase exposure to issuers with improving fundamentals.6

investment team.

LOcom-AuthorsAM-Zufferey.png Yannik Zufferey, PHD
CIO Fixed Income
LOcom-AuthorsAM-Sita.png Leslie Leigh
Client Portfolio Manager

Alpha Generation

Ashton Parker Portfolio Manager/Head of Credit Research 
Denise Yung, CFA Portfolio Manager/Credit Analyst 
Philipp Burckhardt, CFA Portfolio Manager/Credit Analyst 
Anando Maitra, CFA Portfolio Manager 
David Perez, CFA Portfolio Manager/Credit Analyst 
Marc Van Heems, CFA Portfolio Manager/Credit Analyst 
Caroline Reffell, Credit Analyst 
Giuseppe Setzi, Credit Analyst

Fundamental Beta

Jérôme Collet Senior Portfolio Manager 
Raphael Kull, CFA Junior Portfolio Manager

sub-fund information.

Click here for more information on LO Funds - Global BBB-BB Fundamental

Click here for more information on LO Funds - Euro BBB-BB Fundamental

 

sources.

1 There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred.
2 Source: LOIM, Barclays POINT, Bloomberg Barclays Indices, market value as at 31 December 2019. 
3 Source: Bloomberg Barclays indices, gross of fees in EUR. Average returns p.a. differential of Global Corporate BBB-BB over Global Investment Grade between 31 December 2000 and 31 December 2019. Past performance is not a reliable indicator or a guarantee of future results. There can be no assurance that the investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred. 
4 Source: LOIM calculations, Moody’s Annual Default Study: Corporate Default and Recovery Rates, 1920-2018. Measured as annual upgrade rate less downgrade rate from Moody’s. 
5 Source: Barclays POINT, Bloomberg Barclays Indices, LOIM calculations, 31 December 1988 to 31 December 2019. These calculations are indicative and based on past performance of certain products. They do not constitute a reliable indicator of future performance of the Sub-Funds.

6 There can be no assurance that investment objectives will be achieved or that there will be a return on capital or that a substantial loss will not be incurred. Source: Morningstar, 31 December 2019. LO Funds – Euro BBB-BB Fundamental and LO Funds – Global BBB-BB Fundamental (Class EUR NA). See here for more information about the methodology. Awards and ratings may vary without notice. Past performance is not a guarantee or a reliable indicator of future results

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”). The Management Company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management Company”), a Luxembourg based public limited company(SA), having its registered office at 291, route d’Arlon, 1150 Luxembourg, Grand Duchy of Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended and within the meaning of the EU Directive 2011/ 61/EU on Alternative Investment Fund Managers(AIFMD). The purpose of the Management Company is the creation, promotion, administration, management and the marketing of Luxembourg and foreign UCITS, alternative investment funds(“AIFs”) and other regulated funds, collective investment vehicles or other investment vehicles, as well as the offering of portfolio management and investment advisory services. This marketing document relates to “Global BBB-BB Fundamental” and “Euro BBB-BB Fundamental,” each a Sub-Fund of Lombard Odier Funds (hereinafter the “Sub-Fund”).
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Belgium – Financial services provider: CACEIS Belgium S.A. 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 impacts of the Belgian 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,
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