Invest in bond funds
Updates on bond market developments and possible product solutions with bond funds.
What are bonds and how do bond funds function?
What are bonds?
If a debtor (e.g. a state or a company) needs money, they can borrow it from a bank – or they can issue a bond. Investors buy this bond and thus ‘lend’ the money to the debtor. The conditions for how this is done are precisely regulated for each bond. This concerns both the duration of the bond and the frequency and amount of interest payments to the creditor.
FAQ
Corporate bonds, in particular ones with (very) good ratings, have always been a popular form of investment. The expected return on the bond depends on the creditworthiness of the issuer, because the weaker the creditworthiness, the higher the yield on the corporate bond. Credit ratings by rating agencies help to measure a company’s creditworthiness, and thus also estimate the risk associated with a bond. For example, a rating of AAA denotes the best creditworthiness.
High yield bonds are bonds issued by companies with lower credit ratings (BB and lower). These bonds normally offer much higher returns than instruments from issuers with strong ratings. This is exactly what makes them so popular for investments – even though the yield advantage is also accompanied by higher risks.
Emerging Market bonds are bonds issued by companies from the Emerging Markets. These bonds are issued either in the local currency of the country in question or in EUR or USD. These “hard currency bonds” offer yield advantages compared to government bonds issued by euro area core countries or the USA. Local currency bonds feature additional potential as a result of possible currency appreciation (which can also be a disadvantage in the event that the local currency weakens).
The return is the amount earned on an investment, expressed in percent, for a full year and pertains to the capital invested. The return is an important measure for the performance and comparison of capital investments. It can refer to the interest income on a savings account, the current yield on interest-bearing securities, or the dividend payments on equities. The return on an investment expected in the future can deviate from the return that is actually generated.
Duration refers to the average capital commitment period of a bond. It denotes the average period of time it takes for the investor to recover the invested capital. The longer the remaining term of the bond, the longer the duration is. However, the duration is generally shorter than the remaining term, as the coupon payments which fall due on the capital during the term reduce the amortisation period. The higher, earlier and more frequent the coupon payments, the more the duration decreases.
Modified duration expresses the percentage change in the value of a bond when the market yield changes. It shows the percentage increase in the bond price if the market yield falls by 1% or the percentage decrease in the price if the market yield rises by 1%. The higher the modified duration, the larger the price loss in the case of rising interest rates and the price increase in the case of falling interest rates.
Bond markets in detail
Are the prospects still rosy for corporate bonds?
Bonds had an unexpectedly difficult year in 2023, but investors were nevertheless treated to decent returns thanks to a strong finish. This year, the bond markets are already experiencing new headwinds. Will they last? And how will corporate bonds fare?
Investing in Emerging Market bonds (now)?
Emerging Market bonds generally offer higher yields than bonds from developed industrialised countries, not least due to their above-average growth and the increasing global economic importance of many Emerging Markets. Nevertheless, the associated risks should not be ignored.
Bond funds
Bond management is one of Raiffeisen Capital Management's longest established core competencies.
New hold-to-maturity funds: fixed-term investing
Hold-to-maturity funds are a special type of bond funds and offer the opportunity to invest in fixed-interest securities with a clearly defined investment horizon. Find out how these funds work and why they could be an attractive option right now.
Invest in bonds - globally and sustainably!
Our bond fund Raiffeisen-ESG-Global-Rent invests worldwide in accordance with ESG criteria and uses an innovative concept developed in-house to assess the sustainability of countries. It is an excellent instrument for global diversification of bond investments.
Invest in short-dated US dollar bonds
In recent years, the US dollar has gradually appreciated against the euro with comparatively minor fluctuations. This has meant positive returns from exchange rate gains for euro-based investors. At the same time, short-dated US bonds currently offer significantly higher returns than comparable euro bonds. Is now still a good time to enter the market?
Promote the ESG improvement of the EM bond markets
The Emerging Markets present a number of major challenges for investors when it comes to sustainability and ESG-criteria. However, understanding and overcoming these challenges also opens up significant opportunities, both in terms of earnings and promoting a transition to sustainable business practices in the Emerging Markets.
Are high-yield bonds still attractive?
High yield bonds (i.e. bonds from less creditworthy and therefore more risky issuers) have been a sought-after investment instrument for a long time. But, is it currently still worth investing in high-yield bonds?
How a sustainable bond fund seeks opportunities in turbulent times
The bond markets have been characterised by strong fluctuations in yields and prices so far in 2024. Interest rate cuts (especially in the USA) have been priced in and out several times. The bond fund Raiffeisen-Nachhaltigkeit-Rent seeks out and successfully utilises opportunities, especially in such stormy, volatile phases on the bond markets.
Eastern European bonds: promising, despite uncertainties
Bonds from issuers in Central and Eastern Europe have delivered quite respectable returns for investors over the past twelve months. What does the outlook for 2025 look like?
Invest sustainably in euro bonds with Raiffeisen-ESG-Euro-Rent
Since mid-November one of our oldest bond funds, Raiffeisen-Euro-Rent, has started investing sustainably on the basis of ESG (environmental, social, governance) criteria, with a stronger focus on key Future Transformation Topics. As part of this transition, the fund name has also changed, and it is now known as Raiffeisen-ESG-Euro-Rent.
The Fund Regulations of Raiffeisen-ESG-Global-Rent have been approved by the FMA. The Raiffeisen-ESG-Global-Rent may invest more than 35% of the fund's volume in securities/money market instruments of the following issuers: United States, Japan, Germany, France, United Kingdom.
The following assessments of capital market prospects are a snapshot and may change at any time without notice or update. They represent a basic orientation framework and do not represent a generally binding view for fund and portfolio management. They also represent neither a binding forecast nor a recommendation for action for investors. The assessments of individual teams or fund managers may deviate significantly from this under certain circumstances. Similarly, the positioning of the investment funds, asset management products and portfolios may differ significantly from the market outlook mentioned on this page, for example due to different investment horizons, strategies and models used or discretionary decisions made by individual fund managers.
As of March 2025