Bellevue Global Income

The fund returned +0.74% in May with a volatility of 2.1%, compared to the Bloomberg Global Aggregate EUR-Hedged Index, which increased by +0.49%.

This month, credit contributed +0.49% and government bonds +0.25%. Market sentiment improved as investors became increasingly hopeful that tensions surrounding the Iran conflict would ease. This was accompanied by a sharp decline in oil prices, which supported risk assets. Despite credit hedges remaining in place, credit performed in line with broader markets, supported by last month’s investments and a catch-up in Brazilian credit positions. Government bond yields remained volatile but recovered towards month-end as inflation concerns eased.

During May, we maintained the credit allocation at 65%. We faced significant bond redemptions, which were reinvested into new issues: France-based Egis EUR 5.125% due 2031 (rated BB-) and Société Générale EUR 6% Perpetual CoCo, callable in 2031 (rated BB). Given the still uncertain environment and the fact that the iTraxx Crossover Index had returned to pre-war levels, we maintained the 8% short position in the index. On the government bond side, we increased the allocation to long-term government bonds from 5% to 20%, split between 10% Bunds, 5% French 10-year government bonds and 5% Italian 10-year government bonds. We viewed the recent rise in government bond yields as an attractive tactical opportunity. As a result, portfolio duration increased from 3.2 years to 4.4 . The fund offers a EUR yield of 3.7% 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 scenario 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.