2022 was not a good year for bonds. These debt securities issued by States or companies offer a fixed remuneration when the loan is issued. However, in recent years, borrowers have been able to finance themselves at very low cost on the markets. This changed in 2022, with the rise in interest rates initiated by the European Central Bank. Result: issuers had to offer higher remuneration to attract investors. And the old titles, poorly paid, have seen their value plummet.
After rain the good weather. Bond managers are smiling again, since bonds are returning to the path of yield, and are therefore becoming attractive again. Currently, companies pay, depending on their quality, between 4% and 8% per year to borrow for five years on the markets. Very solid large companies, well assessed by rating agencies (category “investment-grade” or “investment”), are at the lower end of the range when small companies that are already highly indebted (category “high-yield” or “high yield”) must offer a higher rate.
All bond media are benefiting from the new situation. To ride this trend, in recent months, management companies have multiplied the creation of term funds. For the saver, the approach is quite similar to a direct investment in bonds, even though this market is not accessible to him. The principle is as follows: bond funds are created with a limited lifespan, with most maturing between the end of 2026 and the end of 2028.
“The manager builds a portfolio of bonds whose maturity corresponds to that of the fund. If no obligation is lacking, you recover your initial stake and the interest at the end of the life of the product, explains Stefan de Quelen, Managing Director of Meilleurtaux Placement. We can easily expect a return of 4% to 5% net of fees. » The return objective is often communicated when the fund is marketed.
Performance visibility
However, a defect cannot be excluded. This happens when an issuer is unable to repay what it owes. “However, the period is delicate, because the economic situation is deteriorating and default rates will increase”predicts Andy Bussaglia, founder of Mon bureau patrimonial.
To limit this risk, the managers carefully select the securities in which they invest, concentrating on companies which they believe can repay their debt on time. In addition, they buy a large number of securities, often more than a hundred, which allows them to minimize the impact of loss if an issuer defaults.
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