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In view of rising interest rates, interest-bearing securities seem attractive again. At the same time, the danger of recession has not been banished and the risk of investments in individual bonds is increasing. “It is better to invest in a whole bundle of bonds than in a single bond. For this reason, bond funds are increasingly suitable for a portfolio as a building block for the bond side”, says Carsten Gerlinger, Managing Director and Head of Asset Management at Moventum AM. “The associated diversification makes it possible to take advantage of the opportunities on the interest rate side with reduced risk.”

The risk with individual bonds increases in phases of an economic downturn. “In the same way, sector-specific and company-specific problems can lead to defaults or price losses”, says Gerlinger. Recently, this was exemplified by Credit Suisse, which was long considered a solid investment. “The rapid crash also took some of the institution's bond classes with it”, says Gerlinger.

Quite fundamentally, difficulties of regions or sectors do not have to lead to default. “But they will contribute to a widening of spreads and thus burden prices”, says Gerlinger. Hence, the investment in an individual bond is always subject to the price change risk.

Funds offer significantly better opportunities here. “Their high diversification effect ensures that defaults of individual bonds or even price losses do not burden the entire portfolio share”, says Gerlinger. “Particularly, flexibly investing funds can also switch between segments and maturities.” For example, in anticipation of a recession, corporate bonds can be replaced by government bonds with a high credit rating, thus reducing the risk.

“Moreover, with investments in individual bonds, there is no diversification possible across maturities”, says Gerlinger. “If you hold on to a bond, you have to accept the price fluctuations.” Funds are much better positioned here and can control duration flexibly. “And it is particularly the duration control that is often a decisive factor for risk management”, says Gerlinger.