Europe: what if the cost of capital starts to rise?

Since 2007, the sharp drop in interest rates has lifted the valuations of all assets, with the longest duration assets gaining the most. The UK’s decision to leave the European Union has caused another flight to “safety”, with a series of record lows in bond yields and record highs in bond prices. With the German 10 year yield dropping to -20 basis points, and the Swiss yield curve negative looking out 50 years, it is worth investors asking themselves the question of how their portfolios will perform if bond yields were, one day, to rise.

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Investment risks

The Neptune European Opportunities Fund may have a high historic volatility rating and past performance is not a guide for future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the original amount invested. References to specific securities are for illustration purposes only and should not be taken as a solicitation to buy or sell these securities. Please remember that forecasts are not a reliable indicator of future performance. The content of this document is formed from Neptune’s views as at the date of issue. We do not undertake to advise you as to any change of our views. Neptune does not give investment advice and only provides information on Neptune products. Please refer to the Prospectus for further details.

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