Erste Asset Management

Spotlight on: corporate bonds

Spotlight on: corporate bonds
Spotlight on: corporate bonds
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ESPA RESERVE CORPORATE: 3 questions for Bernd Stampfl, fund manager.



Bernd Stampfl, fund manager

What are the benefits of these funds, from your point of view?

Stampfl: ESPA RESERVE CORPORATE invests in corporate bonds with short remaining time to maturity. Thereby we try to reach a higher yield compared to other traditional Euro money market investments. The interest rate risk is minimised by the short duration that the capital is tied up for, and the default risk of the issuers is actively managed. The fund is widely diversified across sectors, ratings, and individual bonds. Attractive foreign currency bonds may also be mixed in, in which case we will always hedge the exchange risk vis-à-vis the euro.


What do you as fund manager pay particular attention to in the current market environment?

Stampfl: The primary task of the fund manager is to manage the capital s/he has been entrusted with while employing the utmost care within the framework of the defined fund terms. This implies the careful evaluation on the basis of the economic factors of the various countries involved, the assessment of the sectors that are in the investment universe, and the selection of the individual companies and bonds. Recently, the negotiability or liquidity of a bond has started to play an increasingly important role. The fund manager has to assess already at the point of investment in a bond whether the sale at market prices will be possible at a later date. Bonds with low levels of trade, while offering higher yields than securities that are popular on the trading floor, come with the risk of being illiquid at a later date.

At the moment we are cautious in the selection of companies that depend on the economic cycle or on raw materials. From our point of view these bonds currently do not offer adequate risk premiums. We are also sceptical with regard to corporate bonds that have very good ratings but are traded at negative yields. We believe that this segment is likely to experience a trend reversal, with negative effects on bond prices.


What are the return opportunities in this segment?

Stampfl: Emerging markets or peripheral markets corporate bonds as well as corporate bonds with medium ratings from the high-yield segment offer interesting yield opportunities. Due to the bond purchase program of the ECB we are especially interested in companies with a “BB” rating. From 2011 to 2015 our funds have gained an average 2.5% per year*). Due to the zero interest rate policy of the ECB I do not expect to see higher performance rates than this in the coming years. Generally speaking our target surplus return remains at 1% to 1.5% relative to a money market investment.



Source: ERSTE-SPARINVEST; data as of 26 August 2016


*) Performance calculated according to the OeKB method. The performance accounts for the management fee. Does not allow for a one-time load of up to 0.75% nor any other fees reducing return such as individual account or depositary fees. Past performance is not indicative of future fund performance.


WARNING NOTICE: “This is a marketing message and not financial research. It was not compiled in compliance with the Directives on the Independence of Financial Research and is not subject to the prohibition of trading subsequently to the distribution of financial research.”


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 Benefits for the investor

  • Broad diversification across selected, largely short-term or floating-rate corporate bonds
  • No influence of foreign currencies due to hedging
  • Chance of attractive annual dividend


Risks to be aware of

  • The prices of corporate bonds depend on the ratings of the individual issuers. If these were to deteriorate (or one or more issuer(s) were to become insolvent), this could cause prices to fall
  • A rising level of interest rates can lead to falling prices of the bonds in the fund
  • Capital loss is possible





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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.

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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.

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