In September, global financial markets showed mixed trends, driven by differing monetary policy approaches among central banks.

The US Federal Reserve adopted a more accommodative monetary stance and cut the federal funds rate by 25 basis points, which generally led to a strong backdrop for risk assets, but US Treasuries also delivered positive performance.

Meanwhile, amid the European Central Bank’s and the Bank of England’s cautious monetary policies and some uncertainty around public finances, interest rates rose in Europe and the United Kingdom, leading to declines in government bond prices.

In the South Caucasus, reduced geopolitical risks and expectations of a loosening in US monetary policy generated positive sentiment among participants in Armenia’s financial markets. As a result, small downward shifts were observed in yields on Armenian government bonds across the medium- and long-term segments, which contributed to the fund’s returns.

In these conditions, we implemented a number of tactical adjustments in the fund to align its investments with market trends.

We reduced the fund’s weights in US long-term Treasury securities and UK government bonds, and invested the freed-up funds in foreign money market instruments to reduce interest-rate volatility risk. As a result, the weight of foreign bonds decreased from 25.2% to 22.4%.

On the domestic side, we increased the weight of Armenian government bonds from 35․5% to 37.2%. The decline in the fund’s share of foreign-currency assets from 27.2% to 26.7% was driven by inflows of cash. The fund’s return for September was 1.1%. Both domestic and foreign investments contributed to the positive return.