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Investment opportunities for the second part of 2023

Date: July 18, 2024 Time: 10:24:13

Before determining where the best investment opportunities for the second half of the year lie, we must take into account the fundamental pillars of the investment scenario. The economic environment continues to paint a picture of slowdown with high levels of inflation but, unlike what we see in 2022, the measures adopted by the main Central Banks are having an effect on price growth.

Inflation that stops rising but rises has implications for the decisions that Central Banks can adopt. On the one hand, it is likely that we are close to the end of rate hikes, the market is discounting two additional increases by the Central Bank; on the other, it is also very possible that they remain high for longer than expected.

In this environment, risky assets tend to underperform defensive ones, reaffirming that the world of fixed income is the most attractive for 2023. Fixed income continues to offer the best risk-weighted prospects of all assets. The high interest rates, both short-term (the 12-month Euribor closed June at 4.13%), and long-term (the Spanish 10-year bond yields 3.40% per year), indicate that interest rates are already They include a scenario of a slowdown in economic activity and a ceiling in inflation.

However, interest rates close to maximums should not fool us. In a market as complex as that of fixed income, it is essential that there be professional and active management of both interest rate risk (duration that measures the sensitivity of the price of a bond to changes in interest rates) and the credit risk (ability of an issuer to meet its commitments).

A wide range of funds

Banco Sabadell, supported by Amundi’s experience, has a wide range of investment funds to take advantage of the opportunities offered by interest rates. Among the alternatives, the funds with a defined maturity date (target date) stand out, for which the Amundi group has specialized teams in the world of private fixed income.

Three funds have been launched this year, which will be followed in the coming months by others focused on the world of high credit quality private fixed income (Amundi Buy & Watch, which invests mainly in Investment Grade bonds), as well as thematic opportunities as emitters that favor the energy transition process.

These products bring together attractive coupons, which are usually around 3%, with high diversification (no issuer can exceed more than 2%) and strict risk control. In addition, for more conservative clients, target date funds with a majority investment in public debt of the European Union are an alternative with slightly less profitability and less risk. To manage liquidity, money market alternatives such as Sabadell Rendimiento are an attractive option, since they take advantage of the high interest rates offered by money market assets.

Finally, within the most conservative fixed income, are the guaranteed funds. After the success achieved with the program to launch guaranteed funds with a fixed return (strong demand from clients), the launch of guaranteed funds with variable returns will continue, which, at the same time as guaranteeing 100% of the initial investment, offer a additional return linked to the evolution of an underlying.

In this section, Banco Sabadell began to market its first guaranteed variable return fund from June 13 to July 31. This is Sabadell Capital Extra 1, a fund for just over 2 years in which at maturity (9/22/2025) the client will receive 100% of the initial investment plus 2% and 50% of the average revaluation of the STOXX Europe ESG Leaders Select 30 Index Like the rest of the guaranteed funds launched, it will have quarterly liquidity windows with no redemption commission.

MADE BY ALAYANS STUDIO This content has been produced by ALAYANS STUDIO, Henneo’s Branded Content unit.

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Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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