2024 is a good year for bonds

It doesn't really matter whether key interest rates fall this year or not: "2024 is a good year for bonds and will remain so," says Tobias Geishauser, Co-Fund Manager of DJE - Zins Global. Speculation about falling interest rates had already boosted the bond market last year.

Geishauser no longer believes that the European Central Bank (ECB) will initiate multiple interest rate hikes this year. Although he also expects key interest rates to fall, "this could initially only be 25 basis points. And then several months could follow without further interest rate cuts," says the fund manager.

DJE - Zins Global has been in existence for more than 20 years and invests worldwide in a broadly diversified portfolio of high-quality government and corporate bonds. The current weighting is a good 40 percent government bonds and 60 percent corporate bonds. However, the fund management also has the option of investing in high-yield bonds and securities from emerging markets if they meet DJE's high quality standards.

Focus on high-quality euro corporate bonds

The focus is currently on investment grade quality bonds from the eurozone. On average, they are currently still offering 3.8% interest, although the first interest rate cuts by the European Central Bank (ECB) have already been priced in. This figure is astonishingly high when you think back to the many years of the ECB's zero interest rate policy. High-yield bonds in the eurozone are even paying more than six percent.

Bonds issued in the common currency are therefore also the most important instrument in DJE - Zins Global with just under 55 percent. Bonds quoted in US dollars currently account for around 40 percent. For Geishauser, this is likely to remain the case in the future. "We are still very bullish on the US dollar in relation to the euro." He justifies this with the positive assessment of the economic area. "We generally see greater dynamism and innovation in the US than in the eurozone."

Addition of high-yield bonds possible

In addition to the established bond markets in the USA and Europe, DJE - Zins Global can also invest in bonds from emerging markets. At the moment, for example, our fund management is very positive about bonds from Mexico. With a share of just under six percent, the Central American country is the third strongest region after the eurozone and the USA. In Europe, the fund is even more heavily invested in Poland outside the eurozone.

The following applies to all investments in bonds in non-euro currencies: potential currency risks can be hedged by the fund management using derivatives, so that investors are protected.

Speaking of hedging: "DJE - Zins Global is suitable for investors who want to have a component of stability in their portfolio alongside equities," says Geishauser. "The fund can minimize the overall volatility of a mixed investment."

To the fund portrait DJE - Zins Global