While the stock markets climbed to new record highs in the first half of the year, the first central banks also initiated a turnaround in monetary policy by cutting interest rates. Will the environment remain positive?

In the Funds exclusive series, the fund managers of selected funds look back on developments in the first half of 2024 and give their assessment of what the markets could expect in 2024. (Note: Prognoses are not a reliable indicator of future performance).

Fund & Performance

The ERSTE FIXED INCOME PLUS invests primarily in subfunds with a focus on bonds and money market instruments, whereby absolute return subfunds can also be used. The fund invests flexibly in different bond segments such as national and international government and corporate bonds, inflation-protected bonds, high-yield bonds, emerging market bonds and mortgage bonds. 

Note: Past performance is not a reliable indicator of future performance.

Performance since start of the fund (22.5.2018). The performance is calculated in accordance with the OeKB method. The management fee as well as any performance-related remuneration is already included. The issue premium which might be applicable on purchase and as well as any individual transaction specific costs or ongoing costs that reduce earnings (e.g. account- and deposit fees) have not been taken into account in this presentation.

Commentary by fund manager Gerhard Beulig

How did the fund perform in the first half of the year?

The fund benefited from the positive performance of high-yield bonds, emerging markets, convertible bonds, investment-grade corporate bonds, and investments in absolute-return funds. The higher current yield also helped to achieve a slightly positive result, although yields on government bonds rose slightly. (Note: Please note that an investment in securities entails risks in addition to the opportunities described.)

 

What was your focus in terms of fund management in the first half of 2024?

The focus was on bonds from emerging markets and corporate bonds across all rating segments, in which we invested globally; on absolute-return funds; and on convertible bonds. Money market investments also contributed positively to the performance.

 

What does the fund management team expect for the rest of the year in terms of global economy and trends?

The second half of the year will likely be characterised by a soft-landing scenario for the global economy. Inflation is expected to continue to fall slightly but should remain above central bank targets. That being said, we do expect cautious interest rate cuts. The ECB already executed its first key-lending rate cut in June 2024 of 0.25% to 4.25%.

 

What are your priorities in the fund, based on your expectations?

In such an environment, investments in corporate bonds should continue to perform well, especially in the high-yield segment, as should emerging markets and convertible bonds. We will maintain the proportion of absolute-return funds. Government bonds from developed countries with a long duration would only play a greater role in an environment of unexpectedly weak economic development. (Note: Prognoses are not a reliable indicator of future performance.)

ERSTE FIXED INCOME PLUS

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art  21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to Art  21 AIFMG, and the Key Information Document can be viewed in their latest versions at the website www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.