DNCA Invest Sérénité Plus

Market Environment

At the end of the third quarter of 2026, the global bond market resembles a time machine. The U.S. 2-year yield has returned to its 2024 levels (4.88%); the Spanish 5-year yield, at 3.62%, takes us back to 2013; the 30-year OAT, at 5.47%, to 2002; and the Japanese 10-year yield, at 3.05%, to 1996.

September 2026 did indeed see a rapid rise in bond yields across Europe and beyond, driven by renewed tensions over oil and gas prices. This shock is compounded by other concerns: 1) fiscal issues, particularly in France; 2) capital requirements for financing data centers and AI chips; and 3) restrictive central bank policies, with rate hikes by the Fed, the ECB, and the BoJ in September, accompanied by statements that were at times more “hawkish” than anticipated. It is also worth noting the resilience of economic growth, including in Europe, where economic surprise indicators have remained at high levels since this summer. Thus, at 1.0% according to the latest consensus forecasts, economic growth in the eurozone is expected to remain close to its potential in 2026.

In detail, over the course of the month, the 2-year euro swap rate rose to 3.54% (+39 bp in September) and the 5-year rate to 3.60% (+39 bp). The December 2027 Euribor contract, which indicates anticipated monetary conditions at that horizon, reached 3.52% (+44 bp). Actual inflation in the eurozone has been revised to 3.2% in August 2026, and it is expected to peak at 4.2% in January 2027; one month ago, this January 2027 peak was forecast at 3.8%. The OAT-Bund spread soared to 127 bp (+42 bp).

Euro credit markets are feeling the impact of rising and volatile rates. The spread for the 1–3-year Investment Grade (IG) segment reached 54 bp versus sovereign bonds (+10 bp), while the BB segment across all maturities reached 188 bp (+38 bp). The yields on these indices reached 3.73% (+41 bp) and 5.34% (+76 bp), respectively.

Strategy and Security Selection

Over the course of the month, the fund gradually increased its interest rate sensitivity. We believe market expectations of more than three upcoming ECB rate hikes are high, and this is reflected in short- and medium-term rates that we consider attractive. The fund’s sensitivity stands at 2.2 (+0.3). The fund’s yield has reached nearly 4.0%, a historically high level, and we are therefore seeking to “lock in” this rate over a longer period of time. The portfolio’s credit quality remains solid, with over 80% of securities rated investment grade (including 3% AAA, 6% AA, and 29% A).

The fund’s purchases were concentrated in the primary market, with participation in issues such as OTP Bank Call 2030 (4.5% coupon), Volkswagen Bank 2029 (4.125%), Deutsche Telekom 2031 (4%), and L’Oréal 2029 (3.75%). The portfolio’s holdings of French bank bonds have been reduced, further lowering the fund’s total exposure to France (13%).

Performance Analysis

During August 2026, the fund underperformed by -0.55% compared to -0.42% for the benchmark index . The monthly performance is attributable to carry from the bonds in the portfolio (+0.3%), offset by the negative impact of rising interest rates (-0.6%) and widening spreads (-0.3%).

Year-to-date, the fund’s performance stands at 0.05% compared to 0.03% for the benchmark index. This is below that of purely money market products, which are yielding 1.7%. This is primarily due to the energy shock caused by the war in the Middle East: central banks are responding, and short-term rates are adjusting to this new environment. The 2-year euro swap rate has thus jumped by 127 basis points since the start of the year. The yield on the Sérénité Plus fund has also risen by the same margin, reaching nearly 4.0%. In our view, this higher yield represents attractive performance potential for the coming months.