Persistently high inflation and the restrictive course of the central banks continued to dominate the first half of the year. In this series, Funds exclusive, our fund managers look back on the performance of selected funds and explain their view with regard to the second half of the year.

"We expect inflation to fall but to remain at an elevated level (3-5%)."

Markus Jandrisevits, fund manager CORE Balanced

Fund & Performance

CORE Balanced is a mixed fund of funds and invests between 20% and 30% in equities and up to 80% in bonds. In addition, up to 10% of the portfolio is invested in alternative asset classes. The fund is suitable for long-term capital appreciation.

The performance is calculated in accordance with the OeKB method. The management fee as well as any performance-related remuneration is already included. The issue premium which might be applicable on purchase and as well as any individual transaction specific costs or ongoing costs that reduce earnings (e.g. account- and deposit fees) have not been taken into account in this presentation. Past performance is not a reliable indicator of the future performance of a fund.

Performance since start of the fund
Note: Past performance is not a reliable indicator for future performance.

Commentary by fund manager Markus Jandrisevits

  • Neutral equity weighting in the fund
  • Focus on euro government, euro corporate and euro high yield bonds on the fixed income side

 

How did the fund perform in the first half?

The fund has gained around 4% in the year to date (as of 4 July 2023), which is a good performance.

What was the focus of the fund in the first half?

The fund started the year with a neutral equity allocation. In March, we reduced said allocation slightly due to the events in connection with Silicon Valley Bank and Credit Suisse as well as other uncertainties. At the beginning of June, we brought the equity weighting to a neutral level.

On the bond side, the focus was on EUR government bonds, EUR corporate bonds, and EUR high-yield bonds. In addition, USD bonds, government bonds, and corporate bonds from various emerging markets were mixed in.

What do you expect for the second half in terms of global economy and trends?

We expect inflation to fall but to remain at an elevated level (3-5%). We might see a mild recession in the USA in Q4 2023 or Q1 2024. Central banks will continue to keep a close eye on price developments and the labour market.

At the moment, the trend of Artificial Intelligence (AI) is a strong driver of the equity markets. The shares of companies in the AI sector are currently in high demand. The current valuations and profit expectations now seem very advanced. In addition, we should also like to point out that the S&P 500 technically entered a bull market at the beginning of June.

The cycle of interest rate hikes – especially in the USA – should slowly come to an end, but rapid interest rate cuts are not to be expected at the moment.

What are your priorities in the fund, based on the aforementioned expectations?

In June we stepped up the equity allocation and reduced cash; we may increase the equity weighting further. As far as bonds are concerned, we maintain our primary focus on the bonds from emerging markets, as they might see interest rate cuts sooner than other countries.

CORE Balanced

Important legal note:

Prognoses are not a reliable indicator for future performance.

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art  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 Art  21 AIFMG, and the Key Information Document can be viewed in their latest versions at the website 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 Information Document is available, and any additional locations where the documents can be obtained can be viewed on the website 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.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. 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.

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.