Funds for Euro Bond Exposure

Markets have reacted positively to the ECB’s monetary policy activism and the Eurozone bond market has delivered strong absolute returns over the past 12 months

Mara Dobrescu 12 May, 2015 | 1:49PM

The Eurozone bond market has delivered strong absolute returns over the past 12 months, as evidenced by the 8.9% return of the Morningstar EUR Diversified Bond category over the period.

Markets have reacted positively to the ECB’s monetary policy activism, and in particular to its January 2015 announcement of a QE programme involving the purchase of €60 billion of government bonds – a larger amount than initially expected – until at least September 2016. The ECB’s key interest rate is at an absolute low of 0.05% since September 2014, while the deposit rate is in negative terrain at -0.2%, with an apparent commitment to keep these ultra-loose policy settings for an extended period.

Furthermore, GDP forecasts for 2015 and 2016 in the Eurozone are on an upward trend, as the combined effect of a weaker Euro and the fall in oil prices are seen as key factors allowing for an improved performance of domestic demand.

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About Author

Mara Dobrescu

Mara Dobrescu  is a fund analyst at Morningstar France.

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