In this second article of our three‑part series on fixed income strategies to navigate uncertain financial markets, Andrea Bertocchini, Country Head Benelux & Nordics at Groupe La Française, makes the case for the short duration segment of the High Yield1 market and explains why it may represent one of the most compelling risk-adjusted opportunities available to investors today.
Navigating volatility through different approaches
Geopolitical uncertainty and persistent rate volatility have forced fixed income investors to rethink their approach. In this context, our fixed income strategies to navigate uncertain financial markets (Solutions obligataires CM-AM) offer access to different credit segments, risk profiles, and potential sources of return. These diversified and multi-segment strategies serve different individual needs and duration sensitivity.
With duration risk having caught many investors off guard in recent cycles, a disciplined short duration approach to High Yield1 is increasingly hard to overlook. Positioning along the credit curve is becoming not just a tactical choice, but a strategic one.
Why short duration High Yield1, and why now
The argument for short duration High Yield1 is both cyclical both structural. On the cyclical side, credit fundamentals remain broadly supportive. Strong corporate fundamentals and companies' ability to re-finance themselves in the market are keeping default rates in check: in Europe, defaults are running in line with historical average at 1.7%2 while in the US they sit below the historical average (1.9%2 vs 2.4%2). Moreover, High Yield1 yields are expected to continue to offer an attractive risk premium in the short term.
However, macroeconomic headwinds have not disappeared. Ongoing geopolitical uncertainty and divergence in Central Banks policy call for caution on duration, with spreads that are historically low and that could be expected to remain at this level. Shorter maturities and credit quality help narrow the window of uncertainty and reduce the impact of rate swings.
On the structural side, High Yield1 segment carries a reputation that often obscures a more nuanced reality. The composition of this market has evolved significantly. The short duration segment is home to many issuers with credible credit profiles. The risk-return of short duration High Yield1 is often misunderstood and investors who equate High Yield1 with maximum risks often miss the difference: a portfolio of short maturities High Yield1 bonds issued by companies with solid coverage ratio carries a materially different volatility profile than longer duration counterparts.
Target the right segment of the credit High Yield1 curve can generate attractive income while managing risk with discipline: the short and intermediate segment3 of the credit curve could offer, in our opinion, the most attractive balance between carry and risk control.
A differentiated approach in the short-duration High Yield space
CM-AM High Yield Short Duration is a European High Yield1 bond strategy built around a precise investment logic: capture the yield premium of High Yield1 bond issuances estimated to be of higher quality structurally limiting interest rate sensitivity. The fund targets euro-denominated bonds with short to intermediates maturities (bonds with maturities of two to four years), focusing on issuers rated BB and B, the potential more stable segment of the High Yield1 universe, while systematically excluding the most speculative ones (CCC rated issues). This is not a compromise but rather a deliberate choice. By combining short duration with high quality, the fund captures the bulk of the High Yield1 carry premium while keeping modified duration tight. In an environment of elevated rate volatility, this combination could be a fundamental driver of investors’ outcomes.
Based on a rigorous and proven management process, CM-AM High Yield Short Duration holds approximately 1304 bonds, diversified across sectors and geographies with a modified duration equal of 2.784. The fund integrates Environmental, Social and Governance considerations that serve as an additional filter within a universe that already demands rigorous issuer-by-issuer analysis, acting to a natural complement and reflecting CM-AM’s integrated approach to credit selection. Moreover, the fund is classified as an SFDR Article 85 product.
With a solid 10-year track record, the fund has been through some turbulent stress market phases, as the 2018 credit drawdown, the COVID shock of 2020, the inflationary sell-off of 2022, and the recovery cycle of 2023–2025. Through each of those periods, it demonstrated the risk-adjusted profile its positioning is designed to deliver. The quality bias and the duration management added value precisely when market needed it most. This consistency is reflected in numbers: CM-AM High Yield Short Duration (RC share class: FR0011829134) delivered 10-years cumulated performance of 32.05%7 vs 20.76%7 for its comparative benchmark6. The consistency is also reflected in its Morningstar ranking: CM‑AM High Yield Short Duration (RC share class: FR0011829134) holds a 4‑star rating8.
Conclusion
Short duration High Yield1 is gaining traction as a tool for managing duration exposure while maintaining yield pickup over Investment Grade. For investors constructing fixed income portfolio in today’s uncertain markets, CM-AM High Yield Short Duration could be a well-defined proposition: it can potentially deliver attractive yields by targeting the short-to-intermediate segment of the European High Yield credit curve, while maintaining prudent risk management.
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. High Yield bonds, also known as speculative-grade instruments, offer a potential higher return and more risk than Investment Grade bonds. 2. Source: Credit Mutuel Asset Management as of 29/05/2026. 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. 3. Source: Credit Mutuel Asset Management as of 30/04/2026. Given the subjective nature of certain analyses, it should be emphasized that some forward-looking statements are prepared based on certain assumptions, which may likely differ either partially or entirely from reality. Any hypothetical estimate is, by nature, speculative, and it is possible that some, if not all, of the assumptions underlying these hypothetical illustrations may not materialize or may do so differently from current expectations. 4. Source: Credit Mutuel Asset Management as of 29/05/2026. Portfolio allocation may change at any time. Data is for illustration only and may differ from updated figures. 5. 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. 6. index CM-AM High Yield Short Duration: from inception on 30/04/2014 to 30/12/2021, FTSE MTS Eurozone Govt Bond 1-3 Y, from 30/12/2021 to 19/12/2022, ICE Q5BH, and since 19/12/2022, customized index ICE Q2CH. 7. Source: Credit Mutuel Asset Management as of 29/05/2026. Past performance is not indicative of future results. Performance is not guaranteed and may rise or fall. 8. Sources: Morningstar as of 29/05/2026. ©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.
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. 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. 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
