1) NB: the fund ratio “yield” equals the average yield of the securities held by a fund prior to costs for forex hedging; please bear in mind that this ratio is not equivalent to the fund performance. For the fund performance (i.e. the development of the value) of the aforementioned funds, please refer to the overview table on page three. The above-cited table does also not account for any fees reducing return such as the management fee or individual account or depositary fees.

2) The risk classification of investment funds is based on the SRRI-indicator. The calculation is based on European regulatory requirements and forms an integral part of the Key Investor Document and gives the historical volatility of the fund unit price on a scale from 1 to 7, with 7 being the highest risk. More information about the calculation of the indicator can be found in our Fundglossary | SRRI.

Source: Erste Asset Management; FMP; data as of 30.06.2022

The global economy is in a stagflationary environment. This is new for all groups: Uncertainty for consumers, companies, states (including central banks) and market participants has increased significantly. Long-established relationships between economic parameters (growth, unemployment rate, inflation, interest rates, securities prices) have been called into question. The situation is exacerbated by the effects of the war in Ukraine, which threaten fundamental aspects such as energy and food security, peace, social stability and the geopolitical world order. It is likely that the phase of low macroeconomic volatility ("Great Moderation") established in the past decades has come to an end for the foreseeable future.

Market participants are looking for a new strategy TINA (" there is no alternative to risk assets") no longer applies. The prices of risky security classes are currently exposed to downward pressure. Both theoretical channels of action are at work here: First, the discount rate is rising because both credit risk-free yields and the risk premium are rising. Second, the prospect of falling earnings growth also increases. The underlying driving factor here is inflation.

Inflation spiral risk

Inflation rates are surprisingly high. In times of low inflation, companies and consumers naturally worried little about inflation. However, as inflation continues to rise, trend inflation could eventually reach a level at which inflation expectations also start to rise sustainably - an inflation spiral would be the result. This describes a scenario in which the rate of price increases remains high because this is what consumers and companies expect.

Scenario: Recession

Central banks can have little influence on current inflation. However, they can try to dampen demand, which would require positive real interest rates. The key question is what inflation rate to calculate with. With a high rate, because an inflationary spiral is likely, or with a low rate, because it can be prevented.

Development of bond yields of US- and EUR-Government-Bonds and EUR-Corporate-Bonds Investment-Grade (07/2012-07/2022)

Please note: The development of historic yields is not a reliable indicator for future developments of a specific asset category or asset class. The charts above do not include any fees or costs.

Development of bond yields of European High-Yield-Bonds compared with global High-Yield-Bonds and Emerging-Markets-Corporate-Bonds (07/2012-07/2022)

Please note: The development of historic yields is not a reliable indicator for future developments of a specific asset category or asset class. The charts above do not include any fees or costs.

For a glossary of technical terms, please visit this linkFund Glossary | Erste Asset Management

Legal note:
Prognoses are not a reliable indicator of future performance.”

Yield development over the last ten years

Disclaimer

This document is an advertisement. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. 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 connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the key investor document/KID can be viewed in their latest versions at the  web site www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the key investor document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares 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 shares. Persons who are interested in purchasing shares 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 a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

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