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Allianz US High Yield - AM - HKD

ISIN: LU0648978533

Investment Objective:

The fund concentrates on high-yielding corporate bonds of companies that are domiciled in the U.S.A. Up to 20% of the fund's assets may be invested in securities that are denominated in currencies other than the US-dollar. The investment objective is long-term capital appreciation.

Fund manager:

Forsyth, Doug

Portfolio Highlights:

New buys included primary market purchases within the consumer, industrials, materials and telecom sec-tors. Sells included a call.


From a fundamental standpoint, as well as the observed condition of the economy, defaults should trend to near the long-term historical average into 2017. The current spread of approximately 400 basis points re-flects a market still pricing in a higher-than-likely realized default rate. Stress in select industries of the mar-ket has waned, and overall, balance sheets, leverage ratios and interest coverage ratios continue to support an investment in the asset class. Furthermore, less than 17% of the high-yield market matures before 2020. This amount is well below the average annual new issuance over the past five years. The US economy is expected to expand at a moderate pace in 2017; and the equity market performance and steepness of the Treasury yield curve helps confirm this notion. Moreover, the president-elect's agenda should result in even stronger economic growth. Positive tax reform could boost corporate profitability, ig-nite consumer and business spending, spur M&A activity and even lead to debt reduction efforts. Decreased regulation should have a positive impact on many industries including but not limited to banks, energy com-panies, drug manufacturers and automobile manufacturers. The effects should be wide-ranging from stim-ulating companies to hire and invest or driving lending activity to improving trading liquidity. Increased fiscal spending should accelerate economic growth. Along those lines, cyclicals could benefit from infrastructure spending and military-exposed companies may be impacted by higher defense spending. Indeed, optimism around a Trump presidency and economic prospects could falter if protectionist and anti-trade policies are greater than expected. After rebounding in the second quarter, corporate profits accelerated for the balance of 2016. Based on bot-tom-up estimates, they are poised to trend higher. Additionally, the new administration's policies could cre-ate the most favorable backdrop for corporate earnings in years. US monetary policy continues to be mod-estly accommodative with the Federal Reserve expected to take a gradual approach toward adjustments. The FOMC has projected three interest rate hikes in 2017, and this estimation signals confidence in the US economy's ability to sustain its growth trajectory. The purpose of these adjustments would be to achieve a normalized rate environment, after an extended period of extreme accommodation. Until the Fed either moves aggressively or is well into the tightening cycle, monetary policy should not be expected to drive an extended sell-off and spread-widening in high yield. Notably, in the past 30 years, the US has not fallen into recession, nor have high-yield spreads moved substantially higher, without being preceded by an inverted yield curve. The difference between the 3-month Treasury bill and the 10-year Treasury note remains wide and accommodative for growth. Outside of the US, global monetary policy continues to be overwhelmingly accommodative, with policymakers maintaining aggressive stimulus measures in Europe and in regions throughout Asia. Relative value within the rating categories can be viewed as the composite of all of the factors expected to affect the market. B-rated issuers offer the most attractive balance between return and risk without sacrific-ing the benefits of interest-rate diversification. It is worth noting that higher interest rates are likely to have the greatest impact on the more narrow-spread and generally higher-rated issues in the high-yield market. CCC-rated bonds are the least compelling of the three credit-quality buckets due to their elevated exposure to default risk, and significant price recovery. It is prudent to be highly selective when choosing to invest within this subcategory. From an asset-class perspective, the relative value proposition of US high-yield bonds is clear. With US Treasuries and US investment-grade corporates yielding less than 2.5% and 3.5%, respectively, and trillions worth of debt globally still yielding less than 1%, the 6.3% yield of the US high-yield market is a compelling opportunity for both international and domestic investors alike. Among fixed-income alternatives, high-yield bonds should contribute from both a diversification and a rela-tive-performance perspective. In 2017, a coupon-like return can be achieved. Interest rates should not have a significant impact on the high-yield market given the relative average spread and dollar market price today. The Fed path, earnings trends, commodity prices and global growth will all influence the outlook, too.


Fund price as of 24.02.17

Issue price: 8,38

Redemption price: 8,14

Type of fund: Bond fund

Risk and Reward Indicator*: 4

Currency: HKD

Redemption price (previous day): 8,13

Deviation in %: 0,12

Interim profit: -

Equity gains EStG-investors in %: -

Equity gains KStG-investors in %: -

Annual high (12.01.17): 8,18

Annual low (24.01.17): 8,09

* For each fund a risk and reward indicator will be disclosed which will be calculated on the basis of the fund's volatility. The volatility describes how much the value of the fund went up and down in the past. Funds of categories 1 to 7 of the risk and reward profile have shown in the past a very low (category 1) up to a very high (category 7) volatility. The units of a fund of category 1 to 7 of the risk and reward profile might be subject to very low up to very high price fluctuations based on the historical volatilities observed.


Morningstar-Rating: ** (2)

Feri-Rating: E

Performance data in %

Date: 31.01.17

1 year: 18,43

3 years: 3,44

3 years annualised: 1,14

5 years: 20,48

5 years annualised: 3,80

10 years: -

10 years annualised: -

Since inception: 26,59

Since inception annualised: 4,41

Volatility in %

Date: 31.01.17

3 years: 6,54

5 years: 5,73

Basis of calculation for performance: Unit value (not including front-end loads); Distributions reinvested. Average annual performance is calculated by distributing the total performance of a period, taking into account the compound interest effect, evenly across each respective year.

Past performance is not a guide to future returns.

Source: IDS GmbH


+ Particular yield potential of high-yielding corporate bonds
+ Capital gains opportunities on declining market yields
+ Currency gains against investor currency possible in unhedged unit classes
+ Broad diversification across individual securities
+ Possible extra returns through single security analysis and active management


+ Bonds suffer price declines on rising interest rates
+ High-yielding corporate bonds entail above-average risk of volatility, illiquid markets and capital loss. The fund unit price may be subject to sharply increased volatility.
+ Currency losses against investor currency possible in unhedged unit classes
+ Limited participation in the potential of individual securities
+ No guarantee that single security analysis and active management will be successful