In an environment marked by persistent uncertainty, investors are instinctively turning back to bonds in search of stability and resilience. In a three‑part series, Andrea Bertocchini, Country Head Benelux & Nordics at Groupe La Française, highlights fixed income strategies that help to navigate uncertain financial markets. The opening article focuses on La Française Carbon Impact Floating Rate, showcasing how this strategy could address heightened volatility.
Rethinking fixed income in a volatile world
In an environment shaped by geopolitical uncertainty and persistent rate volatility, moving into fixed income asset class is a rational reflex. The question is no longer whether to allocate to bonds, but where and how as not all solutions are equal. As highlighted in our dedicated landing page on fixed-Income strategies to navigate uncertain financial markets (put link), our credit solutions provide access to various credit segments, risk levels, and potential sources of return, serving a different purpose depending on individual needs and sensitivity to interest rate fluctuations.
As the risk of abrupt yield curve movements remains elevated, short duration strategies, like La Française Carbon Impact Floating Rate, are structurally well positioned to show resilience thanks to their limited interest rate sensitivity. We believe the current market environment is likely to mark a shift in the volatility regime of sovereign bond yields. Uncertainty has intensified since Donald Trump’s election victory, raising fundamental questions about the future fiscal, trade, and geopolitical direction of the United States. This backdrop has converged with growing pressure on public finances in Europe. At the same time, rapidly shifting inflation expectations, partly linked to tensions surrounding the Iran conflict, have further contributed to heightened interest rate volatility.
Why Floating Rate Notes matter today
In this context, floating-rate notes (FRNs) are gaining relevance. Their coupons reset in line with movements in Euribor, offering natural protection in rising rate environments while enhancing carry. With monetary expectations becoming more restrictive versus the beginning of the year, the asset class could benefit from supportive technical conditions. Moreover, FRNs feature low modified duration, helping portfolios withstand the recurring episodes of rate volatility. If compared to their fixed rate coupons equivalents, the FRNs have 90%1 lower volatility.
A differentiated approach to Floating Rate Notes
Within floating-rate strategies, La Française Carbon Impact Floating Rates differentiates itself through a distinctive positioning and flexible approach. Building on Crédit Mutuel Asset Management’s recognized credit expertise, the fund has a cross-over approach, spanning from Investment Grade through High Yield2 and subordinated debt3, within the European Union (EU) and Organisation for Economic Co-operation and Development (OECD) universe. The strategy maintains a low modified duration, typically between 0 and 0.5, and may invest in multiple currencies, systematically hedged back into euros.
In the current environment, La Française Carbon Impact Floating Rates stands out for 3 reasons:
1) Risk-adjusted management through a flexible approach
Unlike many floating rate funds, La Française Carbon Impact Floating Rates operates across the full credit spectrum, adjusting its risk exposure based on the market cycle. This flexibility broadens the opportunity set, enhances diversification, and supports carry generation.
Reflecting the current environment, the fund has adopted a deliberately cautious stance since the end of 2025, with limited exposure to higher risk segments (11.5%4 in high yield bonds2 and 7.3%4 in perpetual subordinated debt5, of which only 3.1%4 in CoCos6) and a meaningful cash (7%4). As conditions gradually eases, allocations to towards so-called “high beta” segments can be gradually increased to capture carry opportunities and potential spread compression.
2) Resilience demonstrated during periods of stress
La Française Carbon Impact Floating Rates has proven performance resilience7 across several shock periods. The 2022 bond market crisis remains the most instructive reference point: in what was arguably the worst year in modern fixed income history, the fund posted a loss of just 2.34%8 vs -11.48%8 for the EUR High Yield index and -13.65%8 for the EUR Investment Grade index. The floating rate structure did exactly what it was designed to do: absorb an extreme rate shock and limit its drawdown. More recently, heightened volatility linked to the Iran conflict once again underscored the benefits of floating rate exposure and its relatively cautious positioning. This resilience is reflecting in Morningstar rankings: La Française Carbon Impact Floating Rates (I share class: FR0013439163) currently holds a 5‑star rating9.
3) Quality as the core of portfolio construction
La Française Carbon Impact Floating Rates is anchored in issuer quality (average portfolio issuers rating: BBB+4), with approximately two-thirds4 of the portfolio invested in the financial sector, in line with the market structure of FRNs. We see this as a well-founded conviction today: European banks benefit from robust capital buffers, improved asset quality, a creditor friendly regulatory framework, and structurally enhanced profitability.
Conclusion
In an environment where taking directional views on sovereign rates remains particularly challenging, La Française Carbon Impact Floating Rate plays a well-defined role within fixed income portfolios: it is suitable for short term allocations, thanks to its liquidity profile, limited rate sensitivity, and potential to outperform money market solutions, while it fits naturally into longer term allocations, having demonstrated resilience across different rates cycle. With relatively linear performance trajectory, limited volatility and drawdowns, low-interest rate sensitivity, attractive carry potential, and an SFDR Article 810 classification, the fund is well suited for investors seeking credit exposure without excessive sensitivity to rate movements and with return objectives beyond those of traditional Investment Grade FRN funds.
Main risks of the fund: risk of capital loss, discretionary management risk, interest rate risk, credit risk, default risk, risk related to investing in high-yield securities, and counterparty risk. Full risk information is available on the fund's prospectus.
1. Source: Credit Mutuel Asset Management as of 30/04/2026. Historical market trends are not a reliable indicator of future market behavior. This data is provided for illustrative purposes only. Depending on the date of publication, the presented information may differ from the updated data. 2. High Yield bonds, also known as speculative-grade instruments, offer a potential higher return and more risk than Investment Grade bonds. 3. A subordinated debt is a debt owed to an unsecured creditor that in the event of liquidation can only be paid after the claims of secured creditors have been met. 4. Source: Credit Mutuel Asset Management as of 31/03/2026. Portfolio allocation may change at any time. Data is for illustration only and may differ from updated figures. 5. Perpetual subordinated debt is subordinated debt in the form of a bond with no maturity date for the return of principal. 6. Hybrid bonds that combine debt and equity elements. 7. Source: Credit Mutuel Asset Management as of 31/03/2026. Past performance is not indicative of future results. Performance is not guaranteed and may rise or fall. 8. Source: Credit Mutuel Asset Management as of 31/12/2022. Past performance is not indicative of future results. Performance is not guaranteed and may rise or fall. 9. Sources: Morningstar as of 31/03/2026. ©2026 Morningstar. All rights reserved. References to a ranking, prize or label do not prejudge the future results of the latter/the fund or the manager. 10. The Sustainable Finance Disclosure Regulation – UE 2019/2088 does not guarantee the performance of the funds. The investment decision must take into account all the fund's characteristics and objectives as described in the prospectus and the KIID of the promoted fund. A fund classified as Article 8 under the SFDR Regulation integrates sustainability risk considerations into its management or explains why sustainability risk is not relevant to the analysis. It is possible for a fund classified as Article 8 of the SFDR Regulation to invest in sustainable investments.
Disclaimer: Marketing communication intended for professional clients and distributors within the meaning of Directive 2014/65/EU (MiFID II).The information contained in this document does not constitute investment advice, an investment proposal, or any inducement to engage in financial market operations. The opinions expressed reflect the views of their authors as of the publication date and do not represent a binding commitment by Groupe La Française. These opinions are subject to change without notice, within the limits of the prospectus, which is the sole authoritative source. Groupe La Francaise shall not be held liable in any way for any direct or indirect damage resulting from the use of this publication or the information it contains. This publication may not be reproduced, in whole or in part, disseminated, or distributed to third parties without the prior written consent of Groupe La Française. www.la-francaise.com This communication was issued by Groupe La Française, a société Anonyme with executive boards and supervisory board with capital of €78836320 RCSPARIS480,871,490. ©2026, Morningstar. All rights reserved. The information presented: 1) belongs to Morningstar and/or their information providers (2) may not be reproduced or redistributed without written agreement by Morningstar (3) is presented without guarantee of accuracy, completeness or news. Neither Morningstar nor their information providers shall be liable for any damages or losses arising from any use of this information. Morningstar or its content providers accept no liability for any damage or loss caused by the use of this information, or for any delay, interruption or omission of information. Past performance is not indicative of future results. Performance is not guaranteed and may fluctuate upwards or downwards. Crédit Mutuel Asset Management: 128, boulevard Raspail 75006 Paris. Asset Management Company approved by the AMF under number GP 97,138. Société Anonyme with capital of euros 3,871,680 registered in the Paris Trade and Companies Register under number 388,555,021 APE Code 6630Z. Intra Community VAT: FR 70 3 88 555 021. Crédit Mutuel Asset Management is a subsidiary of Groupe La Française, the holding company for the asset management division of Crédit Mutuel Alliance Fédérale. La Française Finance Services, an investment company authorised by the ACPR under no. 18673 (www.acpr.banque-france.fr) and registered with the ORIAS (www.orias.fr) under no. 13007808 on 4 November 2016. Internet contact details of the supervisory authorities: Prudential Control and Resolution Authority (ACPR) www.acpr.banque-france.fr, Autorité des Marchés Financiers (AMF) www.amf-france.org
