• Erste AM assets under management increased by 8.9% in 2019.
  • Sustainable investment volume rose twice as much.
  • Escalation risks have fallen in trade conflict.
  • Equities (and equity funds) remain our most attractive form of investment in 2020.

An above-average year is coming to its end for Erste Asset Management (Erste AM), the investment company of Erste Bank und Sparkasse. Thanks to the positive development across almost all asset classes and very positive inflows, assets under management increased from EUR 58.5bn on 31 December 2018 to EUR 63.7bn as of 31 October 2019. This is equal to an increase of 8.9% – and the year has not ended yet.

Assets under management held in sustainable funds have grown by double-digit rate

The increase was even more pronounced for assets held in sustainable funds: assets invested according to ESG (Environmental, Social, Governance) criteria rose from EUR 5.4bn at the beginning of the year to EUR 6.2bn as of 31 October 2019, i.e. by 16.8%. With its total of 15 sustainable mutual funds and numerous special funds, Erste AM is the market leader in the field of sustainability in Austria.

“We are pioneers in the areas of ethics and sustainability: as early as 2001, we launched the first sustainable mutual fund. To us, sustainability is not just a buzzword. Rather, it conveys our conviction that environmental and social factors yield a better long-term performance for our clients,” as Heinz Bednar, CEO of Erste AM, points out.

Mild recovery of global economic growth

“The global economy has become more likely to go through a period of mild recovery in 2020,” says Chief Investment Officer Gerold Permoser. There has been discussion about a possible weakening of the global economy for months. “Some economic indicators suggest that the global economy is not running as flawlessly as it used to do, but we are far from a recession,” explains Permoser. Private consumption and the low unemployment are supporting the global economy. Inflation remains low and “under control”.

Stock exchanges are usually seen as leading indicator of economic developments, and they are currently close to their all-time highs or indeed have passed them. By contrast, the prices of credit-safe bonds have fallen after their all-time high at the beginning of September. The international central banks loosened their monetary and interest rate policy in order to prevent the economy from weakening. Permoser: “The stock exchanges reflect the optimism about the future course of the economy. Optimism outweighs uncertainties, and that is good for the capital markets.”

De-escalation in the trade conflict between the USA and China

The perceived likelihood of an agreement in the trade conflict between the USA and China has increased. While this will probably not cover all areas of conflict (trade, technology, finance, currency, patent protection), the two countries might at least agree on a truce. Erste Asset Management regards the weak automotive sector and the resulting subdued business in the manufacturing sector as negative for the economy. Both are due to the cyclical development of the economic activity.

Bull markets tend to end in a firework

In 2020, the biggest challenge to investors will yet again be the generation of positive yields in an environment of low interest rates. The outlook on a recovery of the global economy and the moderate valuation in terms of company earnings continue to make a case for equities as attractive investment in 2020. The return potential (dividend included) spans a bandwidth of 6 to 8%. The alternatives to equities and equity funds are “limited”, according to Heinz Bednar.

The fact that the bull market has lasted for more than a decade on the stock exchanges has provided the investors with above-average returns throughout the years. “Despite more than ten years of bull market, we are optimistic about its continuation in 2020. The positive signals outweigh the negative ones,” says Bednar.

Asian equities with particularly high potential

In the equity segment, the Erste Asset Management fund managers regard Asian equities as particularly promising, while also expecting good performances from the stock exchanges in the USA, Europe, Japan, and the CEE emerging markets. As far as sectors are concerned, the focus is on raw materials, industrials, consumer goods, and financials. In addition to equites, the experts of Erste Asset Management also regard corporate bonds from the euro area and the USA with higher yields and emerging markets hard and local currency bonds as attractive investment classes.

Products that work around the phase of low interest rates

“Erste Bank und Sparkassen and their advisers have reacted excellently to the persistent phase of low interest rates and alerted customers to alternatives such as fund savings plans,” explains Bednar. In terms of marketing efforts, the focus was on funds and fund savings plans, which are available for a cash deposit of as little as EUR 50 per month.

New forms such as s Fondsparplan Mix (s fund savings plan “Mix”) facilitate the combination of various funds in only savings one plan. The focus is in particular on the sustainable s Fonds Plan Mix and on ERSTE WWF STOCK ENVIRONMENT, one of the best performing funds in Austria in 2019, which invests globally in environmental companies.

On the fixed income front, ERSTE FIXED INCOME PLUS, which invests flexibly for example in domestic and international government and corporate bonds and ERSTE RESPONSIBLE BOND EMERGING CORPORATE, which invests in emerging markets corporate bonds, are popular.

For enquiries, please contact:
Communications & Digital Marketing

Paul Severin
Tel. +43 (0)50 100 19982
E-Mail: paul.severin@erste-am.com

Dieter Kerschbaum
Tel. +43 (0)50 100 19858
E-Mail: dieter.kerschbaum@erste-am.com

Armand Feka
Tel. +43 (0)50 100 12341
E-Mail: armand.feka@erste-am.com




Erste Asset Management GmbH

Am Belvedere 1, A-1100 Wien
www.erste-am.com
Sitz Wien, FN 102018b,
Handelsgericht Wien, DVR 0468703

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 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.

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.

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.