EUR Investment Grade Corporate Bond Portfolio — 3 Year

EUR Investment Grade Corporate Bond Portfolio: Reliable Income from Quality European Issuers

For investors with euro as their base currency seeking predictable income without equity market risk, a curated investment grade corporate bond portfolio provides a straightforward solution. This portfolio holds 12–15 EUR-denominated bonds from well-known European and multinational corporate issuers, all rated BBB- or above by at least one major rating agency, targeting a 4.2% annual coupon over a three-year term.

Why Investment Grade Corporate Bonds in 2026

The current interest rate environment has delivered the highest corporate bond yields in over a decade. For several years post-2008, EUR-denominated investment grade bonds offered yields of 1–2% or less, making them unattractive relative to the risks involved. The rate cycle that began in 2022 and ran through 2024–2025 has reset yields substantially higher — to the point where investment grade corporate bonds now offer genuinely competitive income for capital-preserving investors.

At 4.2% per annum on investment grade credit, investors are being compensated meaningfully for taking on a modest credit risk above government bonds, without the volatility of equity markets or the illiquidity of private assets.

Portfolio Construction

The portfolio is constructed with the following principles:

Credit quality floor: All bonds held must carry an investment grade rating (BBB-/Baa3 or above) from at least one of S&P, Moody's, or Fitch at the time of purchase. Bonds that are downgraded to sub-investment grade during the holding period are reviewed for replacement.

Issuer diversification: The portfolio holds 12–15 individual issuers, with no single issuer representing more than 10% of the portfolio. Issuers are drawn from across European industry sectors — financials, utilities, consumer goods, healthcare, and industrials — to reduce single-sector concentration.

Maturity targeting: All bonds in the portfolio mature within the three-year investment term, ensuring that capital is returned progressively at maturity and that the investor is not exposed to interest rate duration risk beyond the agreed term.

EUR denomination: All bonds are denominated in EUR, providing full currency alignment for euro-based investors with no need for hedging.

Income and Capital Return

The portfolio generates a blended coupon of 4.2% per annum, paid semi-annually directly to the investor's designated account. Capital is returned at bond maturity — each bond repays its face value at its individual maturity date, spread across the three-year term. This laddered maturity profile provides regular capital events and reduces reinvestment risk.

Risk Considerations

Credit risk: Even investment grade bonds carry the risk of issuer default. The portfolio's diversification across 12–15 issuers significantly reduces single-issuer impact, but a simultaneous deterioration in credit quality across multiple issuers — as occurred in the 2008 financial crisis — could result in capital losses. Investment grade defaults are historically rare but not impossible.

Interest rate risk: Should you need to exit the portfolio before maturity, the market value of bonds will fluctuate with interest rate movements. Rising rates reduce bond prices; falling rates increase them. Investors who hold to maturity are not affected by this mark-to-market movement.

Reinvestment risk: Semi-annual coupon income received before maturity can only be reinvested at the then-prevailing market rates, which may be lower than the initial 4.2% yield.

Suitability

This portfolio is appropriate for investors who prioritise capital preservation and regular income over capital growth, have a three-year investment horizon, and hold EUR as their base or spending currency. It is suitable for a broad range of investor profiles, including retail investors, subject to the minimum investment threshold.

How to Invest

Contact our team to discuss the current portfolio composition, available bond issues, and the subscription process. We will provide full KIID documentation for each underlying bond, confirm current yield, and process the investment through a regulated custodian. Minimum investment is €75,000.