Bond market outlook: Corporate bonds (and EM) still preferred
Over the past months, bond yields have recovered sharply from a temporary low at the beginning of the year. While this has already brought historically high yield levels in the USA, yields in the Eurozone are still relatively low. Ten-year German government bond yields are at around 2.6%, which is lower than the key rate low of around 2.75% that is being priced in by the market for the middle of 2025. Should the economy be humming along again in 2025 and inflation thus no longer fall significantly, it may become difficult for long-dated government bonds to hold this low yield level (and thus their prices).
Unlike in past rate cut cycles, falling key rates do not automatically mean falling long-term yields and thus rising bond prices this time around. Because government bonds are already pricing in a large number of interest rate cuts at present.
Thus, we remain overweighted in the equity markets (and are profiting from the strong economy as a result) and underweighted in bonds. Within the bond markets, we remain overweighted in corporate bonds (and hard-currency EM bonds) versus government bonds. See more about emerging markets.
As of June 2024
Bond markets in detail
Rosy prospects for corporate bonds
Bonds undoubtedly had an extremely difficult year in 2022, so many investors had even higher hopes for a positive trend in 2023. And, as it happens, bond investments have indeed gained in value since the start of the year. But what do the next twelve months have in store?
Positive long-term outlook for Emerging Market bonds
In the wake of the rise in US bond yields, Emerging Market bonds have also come under increased pressure since the summer. They had delivered quite attractive performance up until then and offer solid risk-return profiles at the current levels, provided they are selected carefully.
A good time to enter the high yield bond market?
High yield bonds (i.e. bonds from issuers with lower ratings, thus making them riskier) have been a sought-after investment instrument for a long time. And they appear to offer very attractive returns at the moment as well. Is it the right time for an investment in high yield bonds?
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Bond funds
Bond management is one of Raiffeisen Capital Management's longest established core competencies.
Raiffeisen-ESG-Global-Rent: Invest sustainably across the world
Bond investments have enjoyed modest-to-good value growth since the turn of the year, thanks mainly to a significant renewed rise in interest income. But what might happen over the next twelve months, and what are our predictions for the global bond markets?
Raiffeisen-Nachhaltigkeit-Rent: No need to fear the interest rate turnaround
It has frequently been a topic of discussion for years now, sometimes as a source of hope and sometimes as a cause for concern: the “interest rate lift-off”. Now it is finally here and has resulted in massive price and yield movements. Raiffeisen-Nachhaltigkeit-Rent seeks out and takes advantage of opportunities even on these turbulent bond markets.
ESG-transformation of the Emerging Market bond markets
The Emerging Markets present a number of major challenges for investors when it comes to sustainability and ESG-criteria. However, understanding and overcoming these challenges also opens up significant opportunities, both in terms of earnings and promoting a transition to sustainable business practices in the Emerging Markets.
Sustainable profits form the comeback in yields
Raiffeisen Capital Management’s new, fixed-term fund, Raiffeisen-Mehrwert-ESG 2028 II, was starting up in an attractive yield environment, since tangible returns are now possible after many years of zero or negative interest rates. Another positive aspect is that the fund only invests in sustainable enterprises.
Sustainability competence meets bond expertise
Raiffeisen-Euro-Corporates is going sustainable as of 19 September 2022, because the fund will take ESG criteria into consideration starting on this date. There are many good reasons to add sustainability criteria to the decision-making process – including from a risk-return perspective. At the same time, the massive yield increases that have been seen recently open up new return opportunities for investors.
The investment strategy permits the Raiffeisen-Nachhaltigkeit-Rent to predominantly (relative to the associated risk) invest in derivatives.
As part of the investment strategy, starting six months before the end of the term, the Managemetn Company is permitted to invest primarily in demand deposits or deposits with the right to be withdrawn.
The Fund Regulations of Raiffeisen-Inflationsschutz-Anleihen, Raiffeisen-Nachhaltigkeit-Rent, and Raiffeisen-ESG-Global-Rent have been approved by the FMA. The Raiffeisen-Inflationsschutz-Anleihen may invest more than 35% of the fund's volume in securities/money market instruments of the following issuers: France, Netherlands, Austria, Belgium, Finland, Germany. The Raiffeisen-Nachhaltigkeit-Rent may invest more than 35% of the fund's volume in securities/money market instruments of the following issuers: France, Netherlands, Austria, Italy, United Kingdom, Sweden, Switzerland, Spain, Belgium, United States, Canada, Japan, Australia, Finland, Germany. The Raiffeisen ESG Global Bonds may invest more than 35% of the fund's volume in securities/money market instruments of the following issuers: United States, Japan, Germany, France, United Kingdom.
As part of its investment strategy for Raiffeisen-Mehrwert-ESG 2028 II, six months or less prior to the end of the fund’s term, the management company may mainly invest in sight deposits.
As of April 2024