Based on a proven recipe for success

When it comes to responsible investment, ESG criteria* have become established as an important instrument. The criteria are not just indicators for sustainable action, they are a social necessity. But does this also generate returns?

We can give a clearly positive response to the question about returns by looking at our time-tested mixed fund Raiffeisen-ESG-Income, which has offered a good balance of plannable, regular disbursements and moderate risk for years now. This makes the fund a good choice for investors who prefer a more conservative risk profile.

However, there are also investors who are willing to accept higher capital market risks in return for higher regular disbursements. The new Raiffeisen-ESG-Income II fund is tailored to these investors.

Income funds – investment strategy with mixed funds for turbulent times

Current market conditions offer promising earnings opportunities for both equities and bonds. Mixed funds such as Raiffeisen-ESG-Income do a good job of combining these. We have prepared the following overview for you:

Equities – supporting returns with dividends

• Dividend yields still look attractive right now at around 3.7% (even though they are not as high as they were during the low interest rate years)

• Focus on high dividend equities of stable companies with solid business models

• Anticyclical investment style allows for flexible adjustment of the equities allocation depending on the market situation

Bonds – a stable basis thanks to interest income

• Yields are currently attractive (following years of zero or low interest rates)

• Broad diversification of the bond portfolio across various bond classes for optimum balance

• Bonds comprise the largest share of the fund portfolio

Also: The current portfolio return of Raiffeisen-ESG-Income II is around 5.5% p.a. at the moment (Note: Naturally, however, this average yield for the fund portfolio cannot be equated with the expected annual return, which can be lower or higher than this figure.)

Opportunities and risks of Raiffeisen income funds at a glance

As with any investment, the advantages and disadvantages of the Raiffeisen income funds need to be carefully considered. A clear understanding of the opportunities and risks helps you make a solid decision.

Your opportunities

• Combination of dividends and interest income

• Professional management by Raiffeisen KAG’s experienced investment specialists

• Flexible, anti-cyclical investment style

• Broad diversification of fund assets to minimise individual risks (diversification)

Your risks

• Rising interest rates on the capital market may pose significant problems for bond prices

• Unforeseeable volatility may occur on the equity markets

• Positive performance cannot be guaranteed and loss of capital is also possible

A glance at fund management

Have interest rates peaked out?

Higher market yields are possible at any time and would result in falling bond prices. However, our investment specialists expect that interest rates are now already quite close to the upper edge of the prospective range for the coming two to three years. Naturally, it is also possible that market yields will rise again (leading to lower bond prices). However, the fund management believes that substantial, lasting increases in market yields are quite unlikely at present.

Anticyclical investing – sensible or risky?

Warren Buffett once said, “Be fearful when others are greedy and greedy when others are fearful.” This statement describes the concept of anticyclical investing very well. But what exactly does it mean and how can it help you to optimise your investments?

Put very simply, anticyclical investing means buy when others are selling and vice-versa. However, this approach only makes sense if certain conditions are met. Before buying, the fund management considers whether (more) attractive valuations and income levels can be reached. The case is similar when positions are sold. Higher prices alone are not a reason to sell and there also has to be a significant deterioration in the risk-return relationship as a result. The advantage is clear: one tends to make purchases at lower prices!

But this strategy also has its risks. The fund management may buy assets too early, for example, before they reach a low. Furthermore, there is a risk that attractive entry points may be missed. In order to reduce these risks somewhat, the fund management acts with great care and thus only buys and sells individual securities gradually.

*These disbursements can be made from the fund’s earnings as well as from the fund capital (i.e. a repayment of the invested capital). The disbursement amounts can also be adapted to the expected long-term earnings.
**Actual volatility during the year may be higher or lower than this.

The Fund Regulations of the Raiffeisen-ESG-Income and Raiffeisen-ESG-Income II have been approved by the FMA. The Raiffeisen-ESG-Income may invest more than 35 % of the fund's volume in securities/money market instruments of the following issuers: Canada, United States, Japan, Australia, Germany, Finland, Belgium, Spain, Switzerland, Sweden, United Kingdom, Italy, Austria, Netherlands, France.