From A for bonds to Z for interest rates – here we explain the most important terms from the world of finance and provide insights into how the stock market and investing work. Why do share prices fall when bond prices rise, and what exactly is the base rate? 👉 Find out more here!
Inflation continues to make life more expensive and does not stop at the savings of Austrians. More about the future outlook and possible protection strategies.
So far, the year 2022 has brought significant price losses on the stock markets. Inflation and rising interest rates are often cited as the reason. But why is that the case?
An increasing number of investors, when selecting shares, do not only focus on share price performance, but also on a stable, high dividend – for good reason.
Ahead of the ECB’s upcoming interest rate decision, there is much discussion about the central banks’ interest rate policy and the key interest rate – will it be lowered or not? Its development has a significant influence on the economy and the financial markets. In this article, we discuss the role of the key interest rate and which interest rates are relevant.
Interest ensures that the money in the savings account or invested in securities grows. If you have already saved or invested some money, you will receive interest on the interest again. This is compound interest. Compound interest makes your money grow even faster, especially if you don’t touch the money for years and interest rates are high.
There are many factors that may affect inflation. Also, the weights of certain factors may vary across countries. Take the development of the exchange rate, for example.
Equity indices have undergone a global correction in the past days. The Dow Jones index has shed more than 10% from its January high. What is the macro-economic reason for the correction?
Having defined and explained various management styles in equity management in part 1, we will now have a look at the specific styles and their return/risk ratio over time.
A clear sense of style is not only important in fashion, but more and more so in equity management as well. But what does “style” mean in equity management? Do stylistic preferences change over time, like in fashion? If so, what triggers those changes? Questions upon questions, but before we go into detail in part 2 of this series, let us first clarify what we mean by style(s).
In Part two of this series on alternative investment strategies, we described the most important strategies “trend following”, “global macro”, and “long/short equity”. In this Part three, we will be looking at approaches that are less well-known but equally tried and tested.
Volatility has increased on the markets. The main reason for this has not occurred often in the past years: statements by the central bankers according to which the extremely expansive monetary policy will be reeled in. Are we going through a trend reversal?
After illustrating what alternative strategies are in part 1 of this series, how they work, and what benefits and disadvantages they come with, we would now like to discuss some of the most important representatives of this set of strategies. In the following strategies (also called hedge funds), the majority of the capital invested is allocated to alternative models.
Imagine a fairy that grants you three wishes. What would you wish for? The answer would be very easy for me. I would just like to know if the economy is caught up in a recession of has embarked on an expansionary phase a year from now…
Shares (equities) and equity funds – the same or not? Only a small minority of Austrians invest directly or indirectly (via equity funds) in shares. Is it the fear of losses or the lack of knowledge about this asset class that make investors shy away from it?
Two developments are prominently noticeable on the markets at the moment: on the one hand, the indicators of real economic growth suggest a stable real economic growth rate of about 3%. On the other hand, we have seen global consumer price inflation decline since the beginning of the year. The reflation phase, i.e. the general increase in inflation in the second half of 2016, seems to be over (for now).
Author: Christin Bahr, Product Management Securities Erste Group It has been half a year since the launch of the new hybrid bond fund. Reason enough for us to talk to Roman Swaton, Senior Fundmanager.
Author: Christian Süttinger Senior Fund Manager Multi Asset Management In the USA, gradually rising interest rates have already become reality. In Europe and in another large economic area, i.e. Japan, the subdued economic development has prevented interest rates from increasing to date. The European Central Bank manages interest rates in such a way as to […]
Markus Jandrisevits has been the manager of our global flagship equity fund since 28 February 2002. The performance to date is impressive on an international scale. I asked Markus what was special about his investment approach and how he has positioned himself in the current stock market phase of high political risks.
Have you ever been to a Californian beach? If you have, you may have noticed the hoards of “searching”, elderly people. They would usually be holding a metal rod that beeps, looking for valuables that no-one else has found. And sometimes somebody finds a lost golden watch on the beach. But most of the time the things that turn up are only worthless beer caps.
Austria celebrates the 300th birthday of Maria Theresa. She was born on 13 May 1717 in Vienna. It was her who founded the Vienna stock exchange in 1771 on the basis of an imperial patent (see image), after an earlier, failed attempt in 1761. Even though a lot has changed politically, economically, and technically since then, the eventful history of the Vienna stock exchange is still very instructive for every investor.
Football has two strategies. Some prefer focusing on the defensive so as not to concede a goal – i.e. they try to maintain the status quo. Other teams favour the offensive and actively engage in a fight for victory – i.e. they take risks. The strategies on the bond markets are similar. Credit-safe government bonds are preferably used to protect one’s wealth, whereas risky corporate bonds are chosen to produce surplus gains.
The interest rates, or coupons, that bonds pay differ due to a variety of parameters. If bond A pays a higher interest rate than bond B, this premium is referred to as spread.
Who has not heard of the old stock exchange rule “Sell in May and go away” – sometimes complemented by “but remember to come back in September”. We had a closer look at this adage and have analysed the performance on the global stock exchanges over the past 48 years.
Investing for the long or the short term? This is the question bond investors ask. In this blog, we will have a look at German government bonds with a remaining time to maturity of two years (2Y; short) and ten years (10Y; long). More specifically, we are interested in the yield differential between the long- and the short-term interest rates. The technical term here is the “slope of the yield curve”.
Have you ever been to the Monte Carlo F! Grand Prix? If so, you may have witnessed the problem of turning into a curve too late. The race car hits the crasher barrier faster than the driver can react, and a lot of money has to be thrown at the repair job.
Author: Anton HauserSenior Fundmanager Emerging Market Bonds Three and a half years after introduction, the Czech National Bank decided today to remove its 27 CZK/EUR currency floor. Many investors were expecting this decision. Indeed, this trade is currently one of the most popular ones among investors. As expected, the Czech koruna appreciated slightly against […]
We have seen a number of trend reversals this year, one of them being the end of the negative growth surprises. The forecast of economic growth and inflation are currently not subject to downwards revisions any longer.
Economic growth in the emerging markets has picked up substantially, while that in the industrialised economies has been rather stable. This has led to an increase in the growth differential in the emerging markets’ favour. Investor demand for emerging markets bonds has been on the rise in search of higher yields and interest rates.
Author: Felix Dornaus, Senior Fund Manager Emerging Markets Bonds Brazil tactically overweighted at the moment Most of the fundamental economic data are currently not good. In 2016, the country is in recession; for 2017, a minor growth rate of +0.7% is expected. The nominal budget deficit of 2016 is about -10%, with a primary deficit […]
Interview with Christian Gaier, Senior Fund Manager for emerging markets government bonds Emerging equity and bond funds have borne the brunt of the consequences of the global uncertainties in the past years. Wars and conflicts in the region, slumping commodity prices (especially oil), and fears of an interest rate reversal in the USA have caused […]
In the first part of our sector analysis we explained and examined numerous stock ratios. In this part, we want to have a look at how these ratios can inform strategic considerations and what insights can be gained for the composition of an attractive sector-strategy portfolio.
Author: Martina Groll, Senior Fund Manager The bond purchase programme of the European Central Bank has caused a drought on the bond markets. As a result, investors now have to take into account the liquidity risk on top of the interest rate risk and the default risk.
Everybody who has read academic literature on the performance of shares will know about the fact that value shares (and small cap shares) outperform so-called growth shares in the long run.
In an interview with Péter Varga, Senior Fund Manager Erste Asset Management, I am discussing the chances and risks with investments in emerging markets corporate bonds. Many Investors feel unsettled by the weak performance of the emerging markets. Why is this the case?
Following last week’s surprisingly strong employment report, the odds that the US Federal Bank will start raising its policy rate at the next FOMC-meeting in December jumped to almost 70%. Of course, 70% is still short of 100%, but most observers believe that something terrible must happen in the next four weeks to make the […]
Interest rate decision by the Fed Tomorrow, Thursday 17 September 2015, the federal Open Market Committee (FOMC) of the US central bank Fed will be taking an important decision. Is the Fed funds rate to be raised or not? The financial markets have accorded this decision a particularly important role. After all, the rate hike […]
If you thought “quarterly” was a simple adverb characterizing a regularly recurring activity, you may need to reconsider. A new term is making the rounds: “quarterly capitalism” – and in this context, “quarterly” stands for “short-term, myopic, greedy and dysfunctional”. In fact, the term was already invented four years ago by Dominic Barton of McKinsey […]
In searching for a perfect example of a sideways market one does not need to look further than at Central and Eastern European (CEE) equity markets. The CECE Composite, a Euro-based index of 23 Polish, Czech and Hungarian blue-chips (Bloomberg: CECEEUR), has been range bound for nearly four years, rarely trading outside a narrow range […]
The stock exchanges have been moving sideways and down for weeks. There are of course enough uncertainty factors such as the Greek crisis, the correction on the Chinese stock exchange, and the expected interest rate increase in the USA that can serve as explanation. However, one factor that has (so far) been left out of […]
After the recent, rather substantial corrections on the bond markets many investors were wondering: “Can or should I still invest in bonds or bond funds in view of possibly rising interest rates?” Let’s first have a look at the bonds with the highest quality within the Eurozone, i.e. German government bonds. Where have the prices […]
Eurozone government bonds have ensured very good performance returns in the past years. The asset class has benefited from the zero interest rate policy and the very expansive monetary policy of the European Central Bank. In recent weeks the prices of bonds from Eurozone countries have gone through a correction, above all German government bonds. […]
The big trends of the past weeks such as the appreciation of the US dollar, the weakening oil price, falling yields, and the outperformance of Eurozone equities have reversed in the past days and weeks, in some cases drastically so. What is behind all of this? When both demand (i.e. economic growth) and supply (i.e. […]
Bond investors are faced with a difficult environment. Do corporate bonds offer the chance of a halfway decent yield? Stampfl: The statement that bond investors are faced with a difficult environment is actually an erroneous one. A balanced portfolio consisting of bonds from the peripheral countries and the core countries across all sectors would have […]
