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DNCA won Best Fund Provider – Global Bond – Short Term at the APB 2026 Asset Management Awards for Excellence^{^}.

In this Q&A, DNCA portfolio manager and newly appointed chief investment officer, Francois Collet, talks about the risks and opportunities he sees in global fixed income markets, as well as how DNCA’s flagship investment strategy, DNCA Alpha Bonds, is positioned for the future.

Q. What is your view on the US macroeconomic environment?

FC: Growth is decelerating, not towards recession, but clearly decelerating. The Fed is not in the best situation, as it is losing on both of its mandates, so it needs to adjust towards a more neutral monetary policy. This cutting cycle is going to fuel long positioning in the fixed income market. As soon as the central bank starts cutting, it is always better to have long rather than short exposure. While we believe that growth is the main reason why we should see low rates, we also see inflation as sticky, which is why we tend to prefer inflation-linked bonds in the US rather than nominal bonds.

Q. How do you select the European countries you invest in?

FC: We see the outlook for Europe as quite bearish in terms of growth. We are stuck in a low-growth environment, which should not change in the coming quarters. The fiscal plan in Germany will not start to have an effect before the second half of next year, while at the same time, we have recession risks in France. So, we tend to favour long positions in European bonds, because we believe that the growth outlook is not so bright. Having said that, it is important to pick the right countries. We believe that Spain and Italy are the main opportunities because they offer a nice excess return over money market rates while providing a favourable fiscal outlook.

Q: How do you mitigate against volatility?

FC: We diversify. Given that we have much longer exposure in the strategy than in the past, we need to be very well diversified. That is why we have investments in inflation-linked bonds in the US, and in government bonds in Italy, Spain, the UK, New Zealand, Japan and Australia. We tend to diversify the strategy well to keep volatility low.

Q: What opportunities are you seeing in Japan?

FC: Japan’s central bank is in a hiking cycle, which makes it different from other countries and creates interesting opportunities. The Japanese curve is the steepest among developed markets. We should see a flattening of the curve, and so we have long exposure in the strategy on the long end of the Japanese curve. You can buy the long end of the curve at an interesting level, versus being short of intermediaries, maturities, and bonds, which makes long exposure on the long end of Japan very attractive.

Q: Which tail risks are you monitoring?

FC: There are always tail risks in the fixed income market. One of them, which would not be so much of a risk for us, would be a recession. That would clearly mean much lower rates and would be positive for us. The main tail risk, though, is fiscal deficits that are too large, like in the US and France. As such, we are much more cautious about these countries. In the US, for example, where we have exposure, we tend to have steepness in front of our positioning, to mitigate the risk that could arise if we see much wider fiscal deficits.

Q: How is DNCA’s Alpha Bonds strategy currently positioned?

FC: The positioning of the strategy is a mix of all developed markets. We have long exposure, some in inflation-linked bonds and some in nominal bonds. We have curves with flattening, like Japan, and curves with steepening exposure, like the US. On top of that, we have some emerging market risk in a small bucket of the strategy. We tend to invest in hard-currency debt, such as in Eastern European countries or Latin American countries. We do not want to take too much currency risk, so it is much easier for us to be in hard-currency debt.

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Disclaimers:

^{^}2026 Asian Private Banker Asset Management Awards for Excellence were issued by Asian Private Banker, reflecting product performance, asset gathering, service quality and fund selector feedback as at 1 August 2025. For award’s details and methodology, please refer to https://asianprivatebanker.com/awards/asset-management-awards-for-excellence-2026.

The designation “Best Fund Provider” is the award name only given by Asian Private Banker and is not indicative of the performance or returns of any funds.

In Hong Kong: The content of this document is strictly confidential and has been prepared for informational purposes only and for the exclusive use of professional investors. Under no circumstance may a copy be shown, copied, transmitted or otherwise distributed to any person or entity other than the authorised recipient without the advance written consent of Natixis Investment Managers Hong Kong Limited. Investment involves risk.  The information contained herein does not constitute an offer to sell or deal in any securities or financial products. The content herein may contain unsolicited, general information without regard to an investor’s individual needs, objectives, risk parameters or financial condition. Therefore, please refer to the relevant offering documents for details including the risk factors and seek your own legal counsel, accountants or other professional advisors as to the financial, legal and tax issues concerning such investments if necessary, before making any investment decisions in the fund(s) mentioned in this document. Past performance information presented is not indicative of future performance.  If investment returns are not denominated in HKD/USD, USD-/HKD-based investors are exposed to exchange rate fluctuations. Natixis Investment Managers Hong Kong Limited is a business development unit of Natixis Investment Managers, a subsidiary of Natixis that is the holding company of a diverse line-up of specialised investment management and distribution entities worldwide. Certain information included in this material is based on information obtained from other sources considered reliable. However, Natixis Investment Managers Hong Kong Limited does not guarantee the accuracy of such information. Issued by Natixis Investment Managers Hong Kong Limited.

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