Discussions regarding customs tariffs and geopolitical tensions were the main focus in the first six months of the year on the financial markets. Where are the markets headed in the second half of 2025?

In our Funds check series, fund managers from selected funds look back on the past year's performance and give their assessment of what we can expect for the rest of the year. (Please note that forecasts are no reliable indicator of future performance and that investing in securities involves risks as well as opportunities.)

Summary

  • Due to the economic advantages of the CEE countries, we have positioned ourselves very strongly in CEE bank bonds, but also in the mining sector in Latin America, which is benefiting from high metal prices.
  • Our main scenario is for slightly slower growth without recession, which should continue to support our market.
  • We continue to focus more strongly on stable assets in the higher high-yield segment (BB) and are maintaining the aforementioned weightings.

Fund manager Péter Varga
(c) Stephan Huger

Fund & Performance

ERSTE BOND EM CORPORATE invests in corporate bonds from emerging countries. The fund invests worldwide and enables investors to participate in the growth opportunities of these emerging markets. Foreign currency risks against the euro are mostly hedged.

Note: Please note that an investment in securities entails risks in addition to the opportunities described. Past performance is not a reliable indicator of future performance.

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 Péter Varga

How did the fund perform in the first half of 2025?

The fund performed well compared to its peers, particularly in April during the correction phase. By the beginning of July, we had achieved an absolute performance of about 1.5% in EUR (as of 2 July 2025). Due to historically high market valuations, we took a more cautious stance at the beginning of the year, which helped us during the correction phase caused by the US trade policy. In the wake of the pause for negotiations offered for many countries by the US president, the markets recovered rapidly, and spreads fell back to historic lows.

 

What were the fund’s main areas of focus in the first half of 2025?

Due to the economic advantages experienced by the CEE countries, we positioned ourselves very strongly in CEE bank bonds. Over the past few months, we have held numerous meetings with banks from Hungary, Poland, and the Balkan region, which confirmed our thesis for the relatively higher weighting. In addition to these bonds, we also took strong positions in the mining sector (various metals) in Latin America and in subordinated bank bonds in Peru, a country that is benefiting from the current high metal prices. We invested selectively in Asia, where we consider the market to be expensive.

 

What are the expectations of your fund management team with regard to global economic development and trends, among other things, for the second half?

Well, this question largely depends on the US customs policy, but government stimulus packages such as those in China or the EU (investment in the defence and “green” industries) and interest rate cuts will act as a dampener. Overall, as our main scenario, we expect somewhat slower growth but no recession, which should continue to support our market. However, risk premiums on various credit markets currently offer little buffer should the economy weaken more significantly.

 

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

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

We continue to focus more strongly on stable assets in the higher high-yield segment (BB) and are maintaining the above-mentioned weightings. Bonds with better ratings serve as a buffer for adverse scenarios, as they are more sensitive to government bonds, which should then perform better in such a scenario.

 

Please note: investing in securities involves risks as well as opportunities.

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