PHILOSOPHY AND STRATEGY

Axonic’s investment strategies primarily focus on generation of income and other gains while seeking to minimize the adverse effect of rising interest rates by utilizing both top-down and bottom-up analysis during the fundamental research phase and focusing on key sources of risk during the portfolio construction and ongoing portfolio management phases.  Axonic’s investment strategy relies on three primary components: (i) our ability to identify and purchase appropriate securities; (ii) an intensive analytical approach to risk management and portfolio construction; and (iii) Axonic’s ability to construct a blended portfolio of risk-based assets and hedges with a return profile over time that demonstrates increased total return while mitigating risks.

Axonic carries out the Fund’s investment process and risk control procedures by applying various valuation tools, including its own risk and valuation pricing engine.  In particular, Axonic believes that attractive risk-adjusted returns can be produced by systematically discovering misvalued credit risk, structural nuances and other opportunities in income-producing investments. Axonic will attempt to take advantage of the inefficiencies that result from, among other things: (i) inconsistency of performance across deals, issuers, and sectors; (ii) heterogeneity of securities from both a collateral and structural perspective; and (iii) structural complexity.

Axonic will attempt to identify and capture these opportunities and apply appropriate hedging mechanisms as necessary. Given the nature of many of the assets, which, at times, may include illiquid and/or distressed assets, the investment performance of the Fund may be considerably more volatile than that of more conventional markets. The Fund will attempt to consistently achieve attractive risk-adjusted returns through a complex bottom-up evaluation process of individual securities as well as the top-down nature of optimal portfolio construction and hedging.


“Individual investors can fill gaps in markets where banks and insurance companies are constrained by regulatory concerns.”
— Peter Schendel, Axonic Partner