AA/AAA rated European government bonds pension fund

[moneymakeover]

In my pension list of funds there is one that has outdone all the others

It's the AA/AAA European government bonds 10 year plus

Over past 12 months it has returned 8.59%
Over past 7 years it has grown 60%

I'm trying to understand how this is possible? These are the euro country bonds yields? Germany is 0.08%
France is 0.5%

Is it because of some unexpected rates change (expected to go up but didn't)?


Can we expect this fund to continue to grow in this way ?

It's considered medium risk
Which is lower risk than the world equities. Which performed worse.

 

[RedOnion]

Over past 12 months it has returned 8.59%

Bond yields have reduced. So the value of a bond with the interest rate fixed when rates were higher is worth more.

Can we expect this fund to continue to grow in this way ?

Can you expect rates to fall further?
If interest rates go up, the value goes down.

 

[moneymakeover]

There has been greater reluctance in Europe recently to increase rates. Looking in particular at the situation in Italy.
Therefore every reason to think rates will decrease at least over the next 12 to 24 months
But most likely to rise in the longer term

 

[RedOnion]

Therefore every reason to think rates will decrease at least over the next 12 to 24 months

For context, the 10 year German bond yield is currently 0.09%...

 

[moneymakeover]

Yes and expected to go minus

 

[moneymakeover]

Germany is 0.08%
France is 0.5%

 

[moneymakeover]

I guess RedOnion suggesting rates so low they cannot reduce further but I think in light of recession talk, in particular in Italy, and ecb rate hikes postponed now until at least 2020 and beyond its very possible no increase in yields before say end of 2019