Bellevue Global Income

The fund returned +0.40% in October with a volatility of 1.6%, compared with a return of +1.62% for the Bloomberg Global Aggregate EUR-Hedged Index. Credit contributed 0% to performance, while government bonds contributed +0.41%.

The month was marked by a rebound in long-term government bonds, following yield highs not seen since the 2000s, alongside growing uncertainty surrounding the AI ecosystem. The credit portfolio outperformed broader credit markets, supported by credit hedges. Government bond yields in the US and the Eurozone declined by approximately 25–35 bps across longer maturities. The fund’s underweight allocation to government bonds was a key driver ofo its underperformance relative to the Bloomberg Global Aggregate EUR-Hedged Index.

During October, we allowed the credit allocation to decline from 70% to 69% by not reinvesting redemption proceeds, having invested in advance in the previous month. We further reduced exposure to France to 8.6% at month-end, switching into German issuers and broad credit indices. We maintained a short position of approximately 10% in the iTraxx Crossover Index. We increased the allocation to government bonds from zero to 31% to participate in the rebound. We invested in 5-year US Treasuries as we see significant risks in longer-dated government bonds, as outlined in our negative scenarios (see Investment Outlook).

As a result, portfolio duration increased from 3.4 to 4.6 years. At the month-end, the fund had a EUR yield of 4.5% and an average credit rating of A.

We modified our scenarios on October 30th, 2026 as follows:

Positive: AI investments remain strong and the energy bottleneck is resolved. AI spending supports productivity and earnings, while easing Iran tensions improve energy supply. This creates a more supportive environment for global growth and financial markets and could support equities, government bonds and credit.

Base: Resilient growth, rising concerns about AI financing. Economic growth remains resilient, supported by AI investment and solid corporate fundamentals. Inflation stabilizes, with further central bank tightening priced in, keeping long-term yields steady. Concerns about AI financing increase volatility, although earnings continue to support equities. Credit and government bonds benefit from attractive carry income.

Negative scenario 1: Growth concerns return amid sticky inflation. Slowing AI investment weakens growth and earnings. Iran tensions and high oil prices sustain inflation, limiting central banks' ability to ease monetary policy. Equities fall and credit spreads widen. Government bonds initially benefit from safe-haven demand, but persistent inflation threatens their protection.

Negative scenario 2: Inflation and yields break the market. Escalating Iran tensions lift oil prices and inflation. Resilient growth prompts the Fed to tighten more than expected. Higher rates put pressure on stretched equity valuations, potentially triggering an equity correction and wider credit spreads. Rising inflation concerns and yields also weigh on government bonds. This scenario could therefore adversely affect equities, credit and government bonds.