In the Fund Check series, fund managers of selected funds look back on developments over the past year and give their assessment of what we can expect in 2026. (Note: Prognoses are not a reliable indicator of future performance. Please note that investing in securities involves risks as well as opportunities.)

Summary

  • The 2025 performance was stable, with a brief setback at the beginning of April on Liberation Day. This led to uncertainty in the market and a temporary widening of the spreads on corporate bonds.
  • At the beginning of the year, the fund’s positioning was on the defensive side, with a significant overweighting in bank bonds. Over the course of the year, we were regrouping towards a higher weighting in corporate (industrial) bonds.
  • We expect a stable interest rate environment for 2026. This environment should continue to provide good support for corporate bonds in the BB segment.

Fund manager Matthias Hauser
(c) Stephan Huger

Fund & Performance

ERSTE BOND CORPORATE BB mainly acquires corporate bonds of international issuers with the rating ""BB"". Bonds with a BBB or B rating may also be purchased. Any foreign currency risks are mostly hedged. The fund's task is to generate current income in euros. Ecological and social factors as well as corporate management factors are integrated into the investment process.

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 Matthias Hauser

How did the fund perform in 2025?

Overall, the fund achieved a stable performance in 2025. Until the beginning of March, the fund was on the rise, at which point the threat of tariffs by the USA against the rest of the world became more concrete and took effect at the beginning of April with Liberation Day. The uncertainty on the markets also affected the fund, and its performance temporarily turned negative. However, the sentiment changed very quickly again for the better, and by the end of April, the fund was back in positive territory. Since then, it has risen steadily amid lower volatility.

Please note: Past performance is no reliable indicator of the future value development of the fund. Investing in securities involves risks as well as opportunities.

 

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

The fund started the year with a somewhat more defensive approach and an overweight in bank bonds, as the uncertainty regarding US tariffs was expected to cause a major disruption to the global economy. This approach proved to be correct in the first quarter and at the beginning of the second quarter. However, we gradually scaled back the more defensive approach over the course of the year as the market became increasingly unfazed by negative news and credit spreads continued to narrow. We reduced the weighting in bank bonds slightly in favour of corporate bonds from industrial companies.

 

What are the expectations of your fund management team with regard to global economic development and trends, among other things, for 2026?

The interest rate environment is expected to remain stable in 2026, which should provide good support for the market and, above all, performance. Similarly, no negative surprises are expected for the global economy. Credit spreads in the European high-yield segment are currently at historically low levels. While there may be a slight widening, we do not expect a sharp widening. We consider the current yield attractive and expect it to provide good support. Even assuming a slight widening of spreads, this negative impact will be cushioned by the current yield. We also expect the market to remain supported from a technical perspective. This means that inflows into the EUR high-yield segment are expected to continue, which will have a price-stabilising or price-driving effect.

 

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

The fund will continue to reduce its defensive stance and reduce its overweight position in bank bonds. In view of the expectation of a stable environment in 2026, we will also increase the current yield in the fund. From a balance sheet perspective, companies in the BB range are in a comfortable position to overcome any difficulties in 2026. Companies in the BB segment are characterised by generally more stable fundamentals compared to the broader high-yield segment, as well as lower volatility in credit spreads. At the same time, this segment offers a more attractive return than the pure investment grade segment.

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