Erste Asset Management

Investment View | February 2024

Investment View | February 2024
Investment View | February 2024
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What’s happening on the markets? In our Investment View, the experts of our Investment Division regularly provide insights of current market events and their opinion on the various asset classes.

Note: Prognoses are not a reliable indicator of future performance. Please note that an investment in securities entails risks in addition to the opportunities described.

Economic outlook

Inflation rates are falling in developed economies, which is why key interest rate cuts have become likely this year. But the central banks are signalling that they want to wait before taking the first easing steps because the inflation risks are still to the upside. Inflation in the service sector has increased and freight costs have risen due to tensions in the Middle East. Wage growth especially in the EU is still closely monitored by the ECB.

In the USA, the likelihood of a soft landing has increased significantly. At the same time, GDP in the Eurozone is stagnating and China is under deflationary pressure.


1. Soft landing: If inflation continues to fall towards the central bank target, the scope for key interest rate cuts in the first half of 2024 increases. In addition, the supply side improves in this scenario (higher productivity growth). However, economic growth in the developed markets is weakening to a below-average level due to the delayed effect of the key interest rate increases. Probability in our view: 60%

2. Stagnation: The central banks no longer raise key interest rates, but monetary policies remain restrictive for longer than the market is currently pricing. Moderate key interest rate cuts beginning in the second half of 2024. Probability in our view: 30%

3. Inflation / hard landing: The decline in inflation stops at a level that is too high or inflation even rises again because global economic growth remains resilient and the central banks lowered key interest rates too early. Probability in our view: 10%

Asset classes

We have not made any changes to our tactical positioning in February, considering the current market environment. Although the equity market is showing positive momentum, we have not increased the equity allocation at this time due to the recent rapid and strong upward movement. As expected, yields have recently come under some pressure, which is why we are comfortable with the currently overweight in money market instruments.

Note: Portfolio positions of funds disclosed in this document are based on market developments at 28.2.2024. In the context of active management, the portfolio positions mentioned may change at any time. Please note that an investment in securities entails risks in addition to the opportunities described.


In February, our stance on equities remains neutral. On the one hand, strong corporate profits and falling inflation data suggest a positive outlook. On the other hand, potential headwinds could arise from the recent rise in yields and lifted valuations.

We recently made a tactical decision to transition partly from US quality equities to the US health-care sector. This involved reducing our position in US quality by half due to stretched valuations. However, it’s important to note that our fundamental stance on investing in quality stocks remains intact.

We are optimistic about the healthcare sector due to the broadening positive market environment we anticipate in 2024. Many large-cap drugmakers and biotech firms, with the exception of a few outliers buoyed by optimism surrounding a promising weight-loss treatment, currently trade at discounted price-to-earnings ratios, suggesting attractive valuation. Additionally, the defensive attribute inherent in the health-care sector make it an appealing prospect across different market scenarios. We believe that this combination of factors positions healthcare stocks favourably for potential performance moving forward.

Government bonds

The fixed income market’s year-end rally ended in January as central banks adopted a hawkish tone, emphasizing the importance of data-driven decision-making. While the possibility of rate cuts remains open, the timeline for such actions has been pushed further into the future, leading to an increase in yields. Our prudent approach to positioning within government bonds has proven beneficial in light of these developments. We continue to maintain our negative stance on government bonds.

Our views on regional allocation remain unchanged. We continue to favour emerging market government bonds denominated in both local and hard currencies. Yields are attractive as we believe local central bank easing, lower inflation, and a softer dollar could be supportive. Additionally, European government bonds remain a favoured asset class within our portfolio.


We maintain a cautious stance on credit, but we also recognize that there are opportunities within the market. As credit spreads are at multi-year lows, there may be limited room for further tightening. However, we believe that investing in credit, especially within the European high-yield segment, is a prudent decision given the short duration, attractive absolute yield levels and steady fundamentals.

To maintain diversification within our credit portfolio, we hold positions in corporate bonds issued by companies from emerging markets. Spreads within these segments remain relatively more appealing and haven’t undergone such a significant tightening.  Furthermore, the supportive measures implemented by the People’s Bank of China provide are positive for the Asian high-yield bonds within our portfolio.

Money Market

In February, the money market continues to hold its position as a reasonable asset class. This preference persists due to its ability to capitalize on the appealing interest rates offered at the short end of the yield curve, all the while effectively mitigating portfolio risk.


While we acknowledge the potential for Middle East conflicts to drive commodity prices upwards, it’s important to note the counterbalancing risks associated with declining demand due to sluggish economic activity. These factors underscore our neutral view.

We keep a negative outlook on gold as higher real yields in fixed income are detrimental to it.

For a glossary of technical terms, please visit this link: Fund Glossary | Erste Asset Management

Legal note:

Prognoses are no reliable indicator for future performance.

Please note that investments in securities entail risks in addition to the opportunities presented here.


Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website A summary of the investor rights is available in German and English on the website and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

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