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Corporate bond funds continue to attract investors

INVESTINGCorporate bond funds continue to attract investors

In November, corporate bond funds earned an average of 1.36 percent, bringing their average return rate for the past 12 months to 10.93 percent. The return rates are bolstered by net contributions from investors, and a combination of these factors lead to the assets of corporate bond funds exceeding 10 billion PLN in November.

Investors paid a net 322 million PLN into this category of funds in November. As a result, six consecutive months have seen positive contributions, and since June, investors have paid a net 1.67 billion PLN into them. It is important to note that the 322 million PLN inflows from November represent the third-best result of this year, following a record 411 million PLN in September and 341 million PLN in August.

Investors’ money is flowing into corporate bond funds in a wide stream, and coupled with an average return rate of 10.93 percent over the past 12 months, this translates into an increase in the assets of this group of funds to 10.248 billion PLN. Just since the start of the year, these assets have increased by approximately 2 billion PLN. It is worth reminding that in April, the balance hovered around 7.5 billion PLN. However, both of these values are still a long way off from the record levels of over 18 billion PLN in 2018 or more than 15 billion PLN in 2021.

November was the best month of the year in terms of inflows into funds overall. In addition, the assets of all investment fund rose by almost 7 billion PLN and consequently reached the highest level in the history at 314.99 billion PLN.

The good fortunes of corporate bonds continue. This is reflected not only in the results and assets of the funds but also in numerous issues directed towards individual as well as institutional investors. The market for public issues in the second half of the year alone surpassed 1 billion PLN in demand reported by investors.

Attractive return rates bolstered by high interest rates (majority of bonds based on WIBOR), lack of credit risk realization, decreasing appeal of deposits, and volatility on the exchanges – these are some of the factors driving the investors’ attention towards corporate bonds.

I would like to remind that the journey to the record-breaking more than 18 billion PLN in assets of this group of funds is still a long way off.

Author: Szymon Gil, Securities Broker, Certified International Investment Analyst (CIIA). Michael / Ström Dom Maklerski.

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