Bellevue Global Income

The Fund returned +0.01% in April with a volatility of 1.7%, compared to the Bloomberg Global Aggregate EUR-Hedged Index, which increased by +0.14%.

This month, credit contributed +0.14% and government bonds -0.14%. The announcement of a ceasefire in the Iran conflict triggered a sharp rebound in risk assets. Credit underperformed broader markets due to hedging positions and exposure to specific Brazilian issuers. Government bonds remained volatile and did not participate in the ceasefire-driven rally.

During April, we partially reversed the defensive actions taken in March. On the credit side, we increased the allocation from 50% to 64%. We favoured building cash bond positions rather than reduce the 8% short position in the iTraxx Crossover Index, as the recovery in credit spreads was swift, with spreads quickly returning to levels seen prior to the conflict, which were close to historical lows. As a result, around 50% of total credit return is now derived from the interest rate component, highlighting its importance for future portfolio returns.

On the government bond side, we closed the -10% Bund and -5% French 10-year bond positions following the ceasefire announcement and established into a 5% long Bund position towards month-end. As a result, portfolio duration increased from 1.0 to 3.2 years. Given the continued uncertainty around the impact of this oil price shock over the coming months, we will remain active in adjusting the portfolio. The Fund offers a EUR yield of 3.6% with a duration of 3.2 years and an average credit rating of A-.

We maintained our scenarios as follows:

Base scenario: Contained conflict. The conflict has entered a lower-intensity phase, with attacks becoming less frequent and less severe. Oil supply disruptions ease and the global economy, which started the year in a constructive position, absorbs the shock relatively well. Inflation rises temporarily due to higher oil prices, but central banks look through it and avoid aggressive tightening. Equity markets remain range-bound and volatile. This secenario is slightly negative for credit and government bonds.

Positive scenario: Rapid de-escalation. The conflict de-escalates faster than expected, whether through the reopening of the Strait of Hormuz, a weakening of the Iranian regime, or regime change. Oil prices fall back toward pre-war levels, removing inflationary pressure before it becomes entrenched. Underlying economic resilience and structural drivers reinforce confidence. Investors adopt a «buy the dip» stance. Equity markets recover sharply. This scenario is positive for credit and slightly positive for government bonds.

Negative scenario: Oil shock. The conflict remains intense, materially disrupting oil supply and driving a sustained rise in oil prices. The resulting energy shock pushes inflation higher. Central banks face a difficult trade-off and are hesitant to act decisively. Markets begin to price in higher long-term inflation and a global economic slowdown. Equity and credit markets correct. Government bonds are pressured as the inflationary backdrop keeps upward pressure on yields.