After the partial lifting of the lockdown, all eyes are on the economic data in the various countries. The crucial question for the capital markets remains whether the government and central bank measures have been effective. The investment strategy of the YOU INVEST funds is still driven by the pandemic and by the measures taken to fight and contain the resulting damage.
US government demands negative interest rates
US President Trump has called on the central bank to follow the example of other countries and introduce negative key-lending rates. In their statements, central bank officials have pushed that option back. It is currently not regarded as necessary. Other supporting measures such as the purchase of corporate bonds via exchange-traded funds (ETF) have been launched this week. The actual economic data have started to gradually show the full extent of the economic impact of the lockdown. The markets’ reaction has been very restrained.
We continue to favour equities
In the YOU INVEST portfolios, equities remain invested at 75% of their maximum quotas, with the USA accounting for the lion’s share of the equity contingent. In terms of sectors, we have reduced healthcare by a slight margin, given that it had already come a long way. We remain optimistic for most defensive consumer goods and technology shares. Energy companies account for a small, complementary portion.
Neutral / underweighted / overweighted
Bonds: high-yields remain attractive
In the bond sector, we have increased our corporate bond position in the USA. We will continue to mirror the central bank in its purchases with some of our allocation. We have stepped up higher investment grade and high-yield segments, depending on the fund.
We have increased our high-yield position at the expense of international government bonds in foreign currency. Here, we do not expect any impulses from the currency front, and yields are accordingly low. We are keeping our emerging markets positions as well as our US Treasuries, where we hedge the foreign exchange risk.
Zero interest rate drives gold price
The zero interest rate policy should remain in place for a significant amount of time, lending support to the gold price. Gold should at the very least constitute a stabilising factor in the event of a second wave of corona infections. Here, our allocation remains at 2.5%.
This is YOU INVEST
Flexible solutions, professional management, and high transparency: this is YOU INVEST. Erste Bank and Sparkassen, in cooperation with Erste Asset Management, provide an actively managed investment concept for all clients who do not want to manage their own investment but who attach great importance to flexibility and transparency.
The flexible use of a diverse range of asset classes is a crucial factor for the success of any long-term investment. Every asset class comes with a different risk/return profile. In order to optimise said profile, the invested capital is broadly diversified across numerous asset classes, such as money market instruments, bonds, equities, and alternative investments. We also invest in different regions and currencies.
The weighting of the various asset classes is based on the risk specifications of the respective YOU INVEST funds, in connection with their mutual performance correlations. In the overall portfolio, the risk/return profile is the better, the less the individual asset classes are correlated. The negative performance of one asset class can be compensated by the positive performance of another one in the context of the portfolio.
The YOU INVEST active, advanced, balanced, progressive, solid and RESPONSIBLE balanced may make significant investments in investment funds (UCITS, UCI) pursuant to section 71 of the 2011 Austrian Investment Fund Act.
Prognoses are no reliable indicator for future performance.