“For very short investment horizons, short-term investment funds are suitable, but here we have to realize that their yield is governed by the base rate of the CNB and, for example, in a year when the central bank’s rates will be much lower, their potential appreciation will be lower,” advises Partners Lukáš Urban guy.
On the other hand, according to him, bond funds usually buy high-quality bonds and thus secure higher returns for a longer period of time. “In the current situation, when government bond yields are around or above five percent, they have the potential to appreciate clients’ assets at an average rate of over five percent per year, using low-risk investments in quality bonds,” adds Urbanek.
The inflation rate in the EU fell to 8.3 percent, in the Czech Republic it is twice as high
Economic
A bonus for current bond fund investors could be a rapid decline in inflation, which would start to lower long-term yields and push bond prices up.
“The resulting appreciation of bond funds this year can easily exceed eight percent,” says Urbanek.
| People diversify more |
|---|
| After last year’s experience with a sharp drop in the capital markets, more than half of Czech investors began to deal more with the diversification of their assets. This is according to a survey of the investment platform Bondster. |
| In an effort to achieve better diversification, 42 percent of investors started using some new form of investment this year. On the other hand, only a quarter completely abandoned an investment instrument. |
| Czechs most often added mutual funds to their portfolios, eight percent of investors recently started using them. |
There is also interest in the riskier ones
He also points out that even a very mobile client cannot afford to invest in shares if he needs the money in six months. “Short-term reserves must always be managed conservatively. Long-term reserves with a horizon of ten years or more are always dynamic. And it doesn’t matter if we have CZK 5,000 or ten million,” he adds.
Czechs are also increasingly interested in riskier corporate bonds. The average yield of corporate bonds issued in the Czech Republic rose to 8.28 percent in March from 6.38 percent a year ago. The number of emissions also increased. On the other hand, the volume of issues fell from 15 billion to 10.8 billion crowns, according to data from the Dluhopisomat portal.
“Corporate bond yields are growing year-on-year mainly due to higher CNB interest rates. They increased by almost two percentage points and became competition with traditional bank deposits or funds,” said Chief Economist of CFG Vladimír Pikora.
Bonds attract investors to higher interest rates than banks offer on term deposits or savings accounts. “It must be said that for a higher return, clients also bear a higher risk. Corporate bonds are associated with higher possibilities of loss than is the case in banks or, for example, in precious metals,” Golden Gate analyst Pavel Ryba pointed out.
This year’s explosion of mutual funds soon slowed down
Finance
