
Steffen Ullmann
Senior Portfolio Manager – Investment Grade
In recent years, the new issue premium has been a reliable source of returns for bond investors. In the current market environment, this advantage is increasingly disappearing. Especially in these challenging times, active management must demonstrate its added value.
We look for the best investment opportunities across the entire credit spectrum – across ratings, regions and currencies. This in-depth and selective approach enables us to generate added value for our clients even in this environment.
Opportunities through new issues
Over the past two years, new issues in the investment grade segment have offered an attractive opportunity for active management to generate additional returns. Active managers were able to systematically benefit from the new issue premium through targeted participation in new issues – an advantage that passive strategies cannot exploit as they only acquire bonds after the index has been included.
Current developments
However, this advantage has decreased significantly in recent months. The average new issue premium, which is typically between 5 and 15 basis points and has reached up to 30 basis points at peak times, is now often only in the low single-digit basis point range.
The decline in new issue premiums confirms that active management must react flexibly to dynamic market conditions. We have already taken this basic idea into account when developing our investment strategy and consistently focus on an in-depth, selective search for investment opportunities across the entire spectrum of credit ratings, regions and currencies. This methodical and comprehensive approach is at the heart of our investment philosophy and is designed to continuously add value, even when market conditions change.

Source: Bloomberg, Bloomberg New Issue Spread for corporate bonds for the period September 2020 to January 2025, as at: 12.02.2025.
HAGIM CIO Series
This philosophy inspired us to develop the HAGIM CIO Series, which is tailored to the specific requirements of institutional investors. It reflects our approach of generating added value through proactive selection and flexible strategy adjustment, even in times of low new issue premiums.
Risiken
Price losses due to increases in yields and/or higher risk premiums are possible. A total loss cannot be ruled out either.
Past performance is not an indication of future results, nor can future performance be guaranteed.
Disclaimer
This marketing communication within the meaning of the German Securities Trading Act is provided for information purposes only and should not be construed as personal investment advice or a recommendation or solicitation to buy, sell or hold any financial instrument or to adopt any investment strategy. The opinions and statements contained in this document reflect the current assessment at the date of publication. The information contained herein does not constitute a complete analysis of all material facts relating to any country, region or market. No financial analyses are prepared. Where statements are made about market developments, returns, price gains or other asset growth and risk figures, these are merely forecasts and we accept no liability for their occurrence. In particular, past performance, simulations or forecasts are not a reliable indicator of future performance. Assets can fall as well as rise. All information has been carefully compiled, in some cases with recourse to third-party information. Individual details may prove to be no longer or no longer fully accurate, in particular due to the passage of time, changes in the law or current market developments, and may change at any time without prior notice. No guarantee is therefore given for the correctness, completeness and up-to-dateness of all information. Please inform yourself independently about all costs relevant to you. Maintaining a custody account may incur costs; ongoing bank charges may also be incurred. Transaction costs depend on the asset class: For government bonds and collateralized bonds such as Pfandbriefe, they average around 0.02 percent, for corporate bonds 0.085 percent. For less liquid bonds, the transaction costs can also be significantly higher than 0.25 percent. It should also be noted that transaction costs can temporarily be significantly higher during periods of market stress. For all products sold by HAGIM, all relevant cost information is made available prior to purchase. The information is based on our assessment of the current legal and tax situation. Insofar as tax or legal matters are affected, these should be discussed by the addressee with its tax advisor or lawyer. Investments in financial instruments are associated with both opportunities and risks. The handling of conflicts of interest at HAGIM is described at https://ha-gim.com/en/legal-information/ published on the Internet. The information contained herein is intended for Professional Clients and Eligible Counterparties only. This information document is not directed at US citizens or persons permanently resident in the USA, nor at legal entities domiciled in the USA, nor may it be distributed in the USA