August was broadly positive for global markets. Equities advanced, while fixed income returns were mixed: US interest rates fell following signals of a more accommodative stance from the Federal Reserve, whereas communications from the European Central Bank exerted upward pressure on rates in Europe. In this context, US Treasuries delivered positive returns, while prices of euro‑area and UK government bonds declined.

In Europe, corporate bond spreads were largely unchanged, producing a neutral outcome, while the US corporate bond market showed some gains.

In the local market, participants in Armenia’s financial markets adopted a constructive outlook amid reduced geopolitical risks in the South Caucasus and growing expectations of a loosening of US monetary policy. As a result, yields on Armenian government bonds moved slightly lower in the medium and long ends of the curve, which supported the fund’s performance.

During August, changes in the fund’s asset weights were driven by cash inflows and market movements. Cash inflows and movements in the FX market led to a reduction in the fund’s allocation to foreign‑currency assets from 27.6% to 27.2%.

The fund’s return for August was 0.9%. Positive contributors included local investments and US government bonds, while euro‑area and UK government bonds detracted from performance.