Institutional: sad comparison of investment opportunities

Negative interest rates hit many institutional investors especially because they are often barred by regulation or their own restrictions from entering higher-yielding, but also riskier asset classes. A comparison of the investment options shows that German government bonds can no longer be a means of holding cash – especially since quite high volatility is added. Corporate bonds still offer returns, but with higher risks. A special role is played by active funds close to the money market, which create positive returns with very low volatility.

Investors, but also corporate clients and banks themselves, currently have to accept negative interest rates for their credit balances. “Currently, institutional investors’ balances are earning -0.5 per cent or worse,” says EDS founder and CEO Sebastian Bergmann. “A way out is offered by asset classes that are significantly above the money market or an ECB deposit in terms of risk ratios and especially volatility.” But these are not accessible to some investors; often investment guidelines and regulatory restrictions stand in the way […]