Monthly Commentary – October 2024 EUR

by | Nov 11, 2024 | Analysis & Performance, EUR, News

Macro Backdrop

In October the fund showed resilience during a weak month for fixed income, as interest rates were rising. This was notably the case in the US, where strong economic data, combined with the fixed income market pricing in a Donald Trump win, meant that interest rates, as measured by the 10-year US Treasury bond yield, moved up by circa 50 basis points (bps). We also saw volatility within UK interest rates in part due to the UK budget announcement at the end of the month. Interestingly, credit spreads actually tightened during the month, reflecting the continued strong technicals of the credit markets. As such, the impact on corporate bonds of the move in interest rates was partially mitigated by spreads tightening.

Valuations and Fundamentals

We have started seeing Q3 earnings being reported, and European banks continue to deliver very strong sets of earnings. Those mostly came ahead of analyst expectations, with a number of upgrades to guidance for the full year. Overall, the sector remains in a very strong position – high levels of capital, strong earnings and resilient asset quality – so credit-positive. For example, NatWest delivered an 18.3% return on tangible equity (RoTE) in Q3 2024, as profits were up 35% year-on-year and well ahead of consensus on a combination of strong revenue growth and costs that remained under control. Management raised its guidance for its RoTE to be in excess of 15% in 2024 on higher revenue guidance. Capital remained strong, with a Common Equity Tier 1 (CET1) ratio of 13.9% (+0.3% on the quarter), compared to the 10.5% minimum requirement, with approximately GBP 6 billion of excess capital. NonPerforming Loans (NPL) remained very low at 1.5% of loans.

Subordinated debt

Due to the blackout period prior to earnings season, we only saw a few new Additional Tier 1 (AT1) bonds coming to the market. However, those new issues had strong demand. Within the secondary market, spreads continued tightening, notably within AT1 Contingent Convertible bonds (CoCos). We have also seen extension risk continue to fall and it is now currently below 10%.

  • The Valuation date: November 15, 2024
    serieAsOFDateFKFund NameISINMTDYTDSIMTDYTDSI
    120,241,115GAM Sustainable Climate Bond fundIE000BSJBO140.00860.0543-0.01980.865.43-1.98
    220,241,115GAM Star Crdt Ops EUR InvIE00B50JD3540.00720.11080.65520.7211.0865.52
    320,241,115GAM Star Crdt Ops GBP InvIE00B510J1730.00520.09330.92910.529.3392.91
    420,241,115GAM Star Crdt Ops USD InvIE00B57693100.00170.09280.84260.179.2884.26
    520,241,115GAM Interest Trend IncIE00BYM4P9130.00450.09410.37900.459.4137.90

  • Please read this important legal information before proceeding.

    Information contained herein are solely for the use of the person who has accessed this information and may not be reproduced or distributed, even partially, to any other person or entity.

    The material contained herein is confidential and intended solely for the use of the persons or entities with nationality of or respectively with their residence, domicile, registered office or effective administration in a State or Country in which distribution, publication, making available or use of the information is not contrary to applicable laws or any other regulation.

    The material contained herein is aimed at sophisticated, professional, eligible, institutional and/or qualified investors/intermediaries who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described.

    The information is solely product-related and does not take into account any personal circumstances and does not qualify as general or personal investment recommendation or advice. In particular, the information is given by way of information only and does not constitute a specific legal offer for the purchase or sale of financial instruments. Moreover, nothing contained herein is constitutive of any tax advice.

    Every effort has been made to ensure the accuracy of the financial information herein but the information contained herein has not been independently reviewed or verified. Therefore, Atlanticomnium SA gives no assurance, express or implied, as to whether such information is accurate, true or complete and no responsibility is accepted by Atlanticomnium SA for any errors or omissions. Third-party content is the property of its respective provider or its licensor and is protected by applicable copyright law.

    Past performance is not indicative of future performance. The price of shares/units and the income from the funds/trusts can go down as well as up and may be affected by changes in rates of exchange or financial markets fluctuation, out of the scope of Atlanticomnium SA.

    To the fullest extent permitted by law, in no event shall Atlanticomnium SA or our affiliates, or any of our directors, employees, contractors, service providers or agents have any liability whatsoever to any person for any direct or indirect loss, liability, cost, claim, expense or damage of any kind, whether in contract or in tort, including negligence, or otherwise, arising out of or related to the use of the information provided.

    • AgreeCancel
    PERFORMANCE