Investment approach

The investment focus of the globally investing fund is on bonds with short residual maturities, good liquidity and high creditworthiness. The strategy focuses on corporate and government bonds, mortgage bonds, profit participation certificates, zero-coupon bonds and variable-interest debt instruments. The DJE - Short Term Bond achieves a low currency risk by investing predominantly in EUR securities, whereby part of the fund assets can also be invested in foreign currency bonds. Active duration management using interest rate derivatives and management of residual maturities reduces the existing risk of interest rate changes. A balanced mix and an investment horizon geared to short maturities are intended to avoid major fluctuations in the strategy and achieve the most stable performance possible.

Monthly Commentary

April was very volatile across all asset classes. The stock market suffered significantly. Price pressure on energy, many commodities and food remained high in April. Last but not least, the continuation of the Russian war of aggression in Ukraine again fuelled the rise in consumer prices. The international community strengthened sanctions against Russia once again, which was reflected in further increases in commodity prices. Statements by the central banks on possible interest rate steps further fuelled speculation about interest rate hikes on both sides of the Atlantic. In this market environment the bond markets also had to struggle with renewed increases in yields. At the end of April 2-year German government bonds yielded +0.26%, 33 basis points higher than previous month and yields of their Italian counterparts rose from +0.28% to +0.73%. Across the Atlantic yields of 2-year US Treasuries widened by 38 basis points to +2.71%. Corporate bonds of all rating classes also had to contend with considerably rising yields and thus falling prices. Therefore yields on corporate bonds with good credit ratings rose by 57 basis points to +2.12% in Europe and widened by 71 basis points to +4.31% overseas. Yields of high-yield corporate bond jumped 118 basis points to +6.23% in Europe and 99 basis points to +7.0% in the US. In this market environment the DJE - Short Term Bond was able to remain stable with a fund performance in height of -0.19%. The fund’s price performance in April benefited primarily from the strength of the US dollar. On the other hand, the high volatility and the partly sharp rise in interest rates on government and corporate bonds of all credit ratings had a negative impact. During the month the fund management bought short and medium-term corporate bonds and increased the share of US government bonds. In return it selectively reduced corporate bonds from issuers with increased credit risk. It also sold government and supranational bonds from the Asia-Pacific region. The fund's bond ratio remained at 89.65% (89.69% previous month). The share of public sector securities increased to 47.07% from 45.42% previous month. The hedge against interest rate increases was briefly increased again in order to minimize price losses and keep the duration short. At the end of the month the currency hedges of the euro against the US dollar were reduced to the maximum possible foreign currency quota.

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