Erste Asset Management

The return of the yield was short and painful

The return of the yield was short and painful
The return of the yield was short and painful
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In recent years, we have got used to extremely low or indeed negative yields to such a degree that we have to look twice at current yield levels to believe what we’re seeing. But it’s true: the yield is back. The high inflation has forced central banks to abandon their ultra-loose monetary policies. The extensive purchase programmes are to be reduced. Many central banks have started to increase their key-lending rates. We expect the ECB to follow suit in the foreseeable future. On the financial markets, the (expected) interest rate reversal has already left its marks and caused yields to rise on the most important bond markets.

That being said, the level of euro government bond and euro corporate bond rates of good to very good quality is still comparatively low. In the riskier bond segments (subordinated bonds and high-yield bonds), the rising spreads triggered by geopolitical and economic concerns led to a further increase in yields. Thus, these riskier segments offer interesting return opportunities, albeit at a higher likelihood of default and more substantial volatility.

Yields of selected bond segments over time

Source: Refinitiv Datastream. Period of 30 May 2012 to 30 May 2022.
Note: “Past performance is not a sufficient indicator of the future performance of the fund”.

Losses in the year to date

As positive improved yield opportunities are for new investments, yield increases do affect existing investors negatively. Almost all bond segments have incurred significant losses in the year to date. Due to their generally longer maturities, government bonds and corporate bonds from issuers with good to very good ratings (i.e. investment grade) have been particularly badly hit.

Performance of selected bond segments

Source: Refinitiv Datastream. Period of 30 May 2012 to 30 May 2022.
Note: “Past performance is not a sufficient indicator of the future performance of the fund”.

Seize the opportunity of higher yields now

For a chance to put the higher yield level to good use while diversifying their capital across a wide selection of different bond segments, consider ERSTE FIXED INCOME PLUS. The fund was launched four years ago and flexibly invests in different bond segments such as national and international government and corporate bonds, inflation-linked bonds, high-yield bonds, emerging markets bonds, and mortgage bonds by exploiting opportunities on the global interest and currency markets.

The weights of the individual bond segments are set by the tactical asset allocation in order to be able to react to changes in the market environment on an ongoing basis. Depending on our assessment of the market, the weighting of risky bonds my range from zero to 100% (and fluctuate within this range). The fund is denominated in euro, with up to 25% of foreign exchange added in.

The recent increase in yields caused losses for ERSTE FIXED INCOME PLUS as well. Since almost all bond segments were affected by the substantial increase in yields, the flexible investment approach of the fund could not fully take the desired effect.

However, the current yield environment offers opportunities for a dynamic and flexible bond funds such as ERSTE FIXED INCOME PLUS. As of the beginning of May 2022, the fund has increased its focus on high-yield bonds in the USA and Europe. Corporate bonds and government bonds from emerging markets have been reduced slightly in the year to date. The government bonds of developed countries and corporate bonds from the USA and Europe with good to very good ratings command only limited to no weighting in the fund.

The fund pursues an active investment policy and does not follow a benchmark. The assets are selected at our discretion, without any constraints to the latitude of judgement on the investment company’s part.

If we disclose portfolio positions of funds, they are based on the market development at the time of going to press. Due to our active management approach, the aforementioned portfolio positions may change at any point.

Please note that investments in equities also involve risks.

For a glossary of technical terms, please visit this linkFonds-ABC | Erste Asset Management

Legal note:

Prognoses are no reliable indicator for future performance.


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.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.

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