News Overview

EM Corporate Bond Newsletter

April 2026

Monthly report of the fund management

 In March, the Iran crisis led to a widening of risk premiums and higher yields. The widening amounted to just over 20 basis points, whilst the asset class’s absolute performance stood at around -2.2%. US yields shot up by around 40 basis points in an almost parallel movement, contributing significantly to the negative performance. 

 

Macro Overview

Among industrial metals, zinc and copper weakened slightly, whilst in the precious metals sector the correction in the gold and silver markets was more pronounced as speculative positions were closed (among other things). In principle, potentially higher inflation has a positive effect on real assets, so at first glance the weakness of gold was surprising. However, this can be attributed to partial sales by central banks (such as in Turkey) which needed the funds to prop up their own currencies.

Aluminium and chemicals rose as the war restricted supply capacities for oil and gas, key raw materials from the Middle East.  

The latest US macroeconomic figures reported a slowdown in US economic growth. Private consumption is barely growing in real terms – consumers are unsettled by the weakening labour market (lack of new job vacancies, see chart 1) and by higher prices (primarily at the petrol pump) resulting from the Iran conflict. Higher oil and fuel prices could lead to higher prices for food, goods and services, resulting in a loss of real income – this development would reinforce the stagflation scenario. 

Chart 1: US Labor Market – Job Losses Are on the Rise

Source: US Bureau of Labor Statistics, Robert Lawrence, Datawrapper. January and February 2026 are preliminary data. Data as of 28.2.2026

According to statements by various Fed members, the Fed will wait and see what secondary effects the price shock has and monitor whether these could then lead to higher inflation expectations. 

In line with this trend, the bond market fluctuated between concerns over inflation and growth. The correlation between movements in risk premiums on corporate bonds and government bonds – seen as safe havens – rose sharply, meaning that government bonds did not act as a stabilising factor in this environment.

Emerging Markets Overview

The conflict in Iran is unfolding against the backdrop of a – for the time being – robust Chinese economy. All economic indicators, such as consumer spending, industrial production and purchasing managers’ indices, were better than expected whilst inflation also edged up slightly. China is attempting to adopt a neutral stance in this conflict, yet there are numerous media reports alleging that Chinese companies are using AI to crack US military radio communications in support of Iran. The veracity of these claims is difficult to ascertain, particularly as such reports also originate from rather Trump-friendly media outlets such as Fox Business (Source: Fox News).

Fact is that China is an oil importer and, moreover, the largest buyer of Iranian oil. This is certainly being taken into account in US war planning, given that little has been achieved so far with the tariff policy towards China.  

Many emerging markets are initially attempting to cushion the oil price shock with administrative and fiscal measures. The IMF, however, warned that the scope for action for many countries (globally speaking) is rather limited due to high levels of public debt. 

Consequently, credit ratings have suffered – meaning that the risk premiums of some oil-importing countries have risen more sharply recently. These include Turkey, Ivory Coast and countries in Central America or from the Caribbean, such as Guatemala, Costa Rica and the Dominican Republic. 

Argentina has so far benefited from high commodity prices (oil, gas, soya beans, etc.). However, this uneven economic development is beginning to cast a shadow, as the industrial sectors are suffering from the relatively strong peso and have started to cut their workforce.  Furthermore, recent allegations of corruption have caused Milei’s approval ratings to plummet. This is a development we are currently monitoring very closely, as we are more heavily positioned due to the positive performance in Argentina to date, and the contribution to performance has also been quite positive due to the high carry effect. 

Overview of EM Companies

Higher energy prices and those of other raw materials will lead to a rise in production costs across almost all sectors. In mining, too, energy accounts for a significant proportion of costs (see chart 2), so it is important for many EM companies that commodity prices remain strong. 

And so energy companies in general and chemical firms from Latin America (as reported, some of the competition from Asia is not producing, or producing significantly less) have so far been the winners of the Iran conflict.  

Chart 2:  Breakdown of cost component for industrial and precious metals

Outlook & Performance

The conflict, its intensity and Iran’s reaction also came as a surprise to us. We reduced holdings in cyclical sectors and high-yield bonds in anticipation of the expected economic weakness and to ensure we could act swiftly should liquidity needs arise.  

It must be noted, however, that in such a market environment, selective regional or sector allocation does not always deliver the diversification effect one might otherwise expect. We were underweight in the Middle East – yet the bonds did not perform significantly worse than those from Mexico or Chile. AT-1 bank bonds from the Middle East exhibited similar behaviour. The greatest challenge, however, lay in the highly dynamic news situation – as this often remained contradictory or saw the message or level of information change in daily updates. 

What was striking, however, was how stable high-yield bonds remained in such an environment. They fell by just 1–3 basis points and performed similarly to 7- to 10-year BBB bonds. As a long-standing market participant, such developments give one pause for thought, particularly as all markets are currently being significantly influenced by political news and the resulting sentiment. Fundamental issues are largely being ignored. The fund’s performance in March was in line with the benchmark and was therefore market-neutral. 

Note: Investments in securities entail risks in addition to the opportunities described.

Performance opportunities for the funds:

  • A swift end to the Middle East conflict with Iran and the reopening of the Strait of Hormuz could trigger a relief rally
     

Performance risks for the funds:

  • Current economic developments could lead to stagflation – with negative implications for economic growth, central bank interest rate policy and corporate profits

Overview Performance

ERSTE BOND EM CORPORATE

Note: Performance chart since fund launch. Past performance does not allow any reliable conclusions to be drawn about the future performance of the funds. The performance is calculated according to the OeKB method. The performance assumes a full reinvestment of the distribution and takes into account the management fee and any performance-related remuneration. The one-off front-end load that may be incurred upon purchase and any individual transaction-related or ongoing income-reducing costs (e.g. account and custody account fees) are not included in the presentation.

Institutional share classes

AT0000A1W4B7 = Distributing share (A)
AT0000A1W4C5 = Accumulating share (VT)

Retail share classes

AT0000A05HQ5 = Distributing share (A)
AT0000A05HS1 = Accumulating share (VT)

ERSTE BOND EM CORPORATE IG

Note: Performance chart since fund launch. Past performance does not allow any reliable conclusions to be drawn about the future performance of the funds. The performance is calculated according to the OeKB method. The performance assumes a full reinvestment of the distribution and takes into account the management fee and any performance-related remuneration. The one-off front-end load that may be incurred upon purchase and any individual transaction-related or ongoing income-reducing costs (e.g. account and custody account fees) are not included in the presentation.

Institutional share classes

AT0000A1Y9D0 = Distributing share (A)
AT0000A1Y9H1 = Accumulating share (VT)

Retail share classes

AT0000A0WJX7= Distributing share (A)
AT0000A0WJZ2 = Accumulating share (VT)

ERSTE RESPONSIBLE BOND EM CORPORATE

Note: Performance chart since fund launch. Past performance does not allow any reliable conclusions to be drawn about the future performance of the funds. The performance is calculated according to the OeKB method. The performance assumes a full reinvestment of the distribution and takes into account the management fee and any performance-related remuneration. The one-off front-end load that may be incurred upon purchase and any individual transaction-related or ongoing income-reducing costs (e.g. account and custody account fees) are not included in the presentation.

Institutional share classes

AT0000A1PY56 = Distributing share (A)
AT0000A2MKX2 = Accumulating share (VT)

Retail share classes

AT0000A13EF9 = Distributing share (A)
AT0000A13EH5 = Accumulating share (VT)

Overview performance contribution in %

Performance contribution at country level

(relative to the benchmark)

Performance contribution at share level

(relative to the benchmark)

Source: Erste AM; Calculation period March 2026; Contribution to gross excess returns in %, Fund: ERSTE BOND EM CORPORATE, Benchmark: J.P.Morgan CEMBI Broad Diversified Composite Index hedged in EUR; Gross performance data (without deduction of management fee); The companies listed here have been selected as examples and do not constitute an investment recommendation. In the context of active management, the above portfolio positionings may change at any time. 

Fund management

Lead-Manager Péter Varga

...has been a member of the Credits team at Erste Asset Management since 2005. As a Senior Professional Fund Manager, he is responsible for various emerging market corporate bond strategies in the team. He has more than 20 years of investment experience. Before joining the company, Péter Varga was responsible for convertible bond and corporate bond funds and the management of two total return funds at Union Investment (Frankfurt/M.).

Co-Manager Thomas Oposich

...is a senior fund manager in the fixed income division of Erste Asset Management. His current focus is on emerging market corporate bonds. Thomas Oposich has been with the company since 2005 and has many years of experience in bond management. During his career, he has been responsible for a broad range of bond funds consisting of US government, money market and corporate bonds, as well as mortgage-backed securities and euro government bonds.

Co-Manager Agne Loibl

...has been with Erste Asset Management since 2010. As a Senior Fund Manager in the Credits team, she is responsible for emerging market investment grade corporate bonds and the Asian markets. Agne Loibl has extensive experience in the area of credits. She started her career in research at ESMT Customized Solutions in Berlin and moved to Risk Management Securitisations at Erste Bank in 2007. 

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Overview Erste AM EM corporate strategies

Source: Erste Asset Management; Data as of 31.3.2026

Ratings

For a further analysis, you can view our fund at:

Morning Star Rating:                4 Stars
Morning Star Sust. Globes:     3 Globes
Scope Rating:                           A – 69/100

Risk notes for the mentioned funds

Disclaimer

This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. All data is sourced from Erste Asset Management GmbH, unless indicated otherwise. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to Art 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011.

The fund prospectus, Information for Investors pursuant to Art 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the  web site www.erste-am.com within the section mandatory publications  or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the fund prospectus or the Information for Investors pursuant to Art  21 AIFMG and the Key Information Document are available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to Art 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund. Please note that investments in securities entail risks in addition to the opportunities presented here. The value of shares and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your shares. Persons who are interested in purchasing shares in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to Art 21 AIFMG for restrictions on the sale of fund shares to American or Russian citizens. Misprints and errors excepted.

The public sale of shares in the specified fund in Germany was registered with the Federal Financial Supervisory Authority, Bonn, pursuant to the German Kapitalanlagegesetzbuch (KAGB). The issue and redemption of unit certificates and the execution of payments to unit holders has been transferred to the Fund's custodian bank/depositary, Erste Group Bank AG, Am Belvedere 1, 1100 Vienna, Austria. Redemption requests can be submitted by investors to their custodian bank, which will forward them to the Custodian Bank/Depositary of the Fund for execution via the usual banking channels. All payments to investors are also processed via the usual banking clearing channel with the investor's custodian bank.. In Germany, the issue and return prices of shares are published in electronic form on the web site www.erste-am.com (and also at www.fundinfo.com). Any other information for Shareholders is published in the Bundesanzeiger, Cologne.

Presentations:

It is expressly noted that presentations shall not be construed as providing investment advice or investment recommendations; presentations simply represent the current market opinion. The presentations are not intended as sales instruments and shall therefore not be construed as an offer to buy or sell financial or investment instruments. The investor shall be solely responsible for any and all decisions that he makes on the basis of this presentation.