After a difficult year of 2022 on the markets, many asset classes saw rebounding performances in 2023. While the central banks' turnaround on interest rates ensured a “return to normality” on the bond market, the focus on the equity market was primarily on technology companies. In the Funds exclusive series, the fund managers of selected funds look back on developments of the previous year and give their assessment of what the markets could expect in 2024. (Note: Prognoses are not a reliable indicator of future performance.)

"The current low unemployment rate and the stable profit trend of companies are ostensibly suggesting a resilient economic environment. However, we cannot rule out a recession."

Philip Schifferegger, fund manager ERSTE GLOBAL INCOME

Fund & Performance

ERSTE GLOBAL INCOME mainly invests in the three asset classes of dividend stocks, high-yield corporate bonds and emerging market bonds. These asset classes are usually characterized by comparatively high current income ("income") in the form of dividends or coupons (Note: Please note that an investment in securities entails risks in addition to the opportunities described). The maximum equity exposure is 50% of the fund volume. Depending on the market assessment, other asset classes can be added tactically.

Note: Past performance is not a reliable indicator of future performance.

Performance since start of the fund (2.11.2015). 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.

Commentary by fund manager Philip Schifferegger

How would you sum up the past year?

In 2023, inflation was significantly lower than a year earlier, and market participants were hoping for a soon stop to the interest rate hikes by the central banks. The economy also proved to be stronger than expected and company earnings growth remained solid. This gave new momentum to promising asset classes after the previous price losses. By the end of November, equities, especially growth shares, as well as corporate bonds and emerging market bonds, had posted robust gains. Conservative investments, on the other hand, such as government bonds from industrialised countries, failed to follow this trend, moving sideways in a volatile manner and closing the reporting period with a small gain at best. The performance of high-dividend shares was also modest, as they, like value shares, were unable to match the overall market.

The allocation of asset classes in the ERSTE GLOBAL INCOME fund remained largely stable. Around a third of the assets each was invested in high-dividend equities, corporate bonds, and emerging market bonds. Both equities and bonds contributed positively to performance. In the year to date, ERSTE GLOBAL INCOME gained +6,3% after costs.

 

What do you expect for 2024?

The central banks will not change their key-lending rates for the time being and will continue to monitor the development of consumer prices and the economy. The current low unemployment rate and the stable profit trend of companies are ostensibly suggesting a resilient economic environment. However, we cannot rule out a recession. The extent and timing are of course unknown, but in principle we can say that the later any economic downturn comes, the better it is for the markets. This is because the more time passes and inflation approaches the target value of 2%, the faster and the more strongly the central banks can react and cut key-lending rates again.

Against this backdrop, we continue to expect a market environment with pronounced levels of volatility in 2024 but are confident that the positive factors will outweigh the negative ones for the asset classes of ERSTE GLOBAL INCOME.

Note: Please note, that an investment in securities entails risks in addition to the opportunities described.

ERSTE GLOBAL INCOME

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.