Top 10 government bonds among professionals over the past decade - US Treasuries take the lead

Institutional investors on the platform of Universal Investment have significantly reduced the proportion of their investments in government bonds over the past ten years. While the total volume of German institutional funds administered by Universal Investment rose from EUR 160.4 billion at the end of 2014 to EUR 622.1 billion at the end of 2024, the share of government bonds – traditionally the most important portfolio component for pension funds, corporations, and insurance companies – fell from 16.2 percent to 11.3 percent.

The decline is due to the long zero-interest rate phase following the global financial crisis, during which investors turned to higher-yielding asset classes such as alternatives. Despite the interest rate turnaround in 2022 and the normalisation of key rates in 2024, government bonds have not (yet) regained their former significance.

The weighting among different government issuers has also shifted significantly since 2014. Although German federal bonds (Bunds) remain by far the most common in institutional portfolios, their share fell from 31.7 percent of all government bonds in 2014 to 28 percent in 2024 - no country has lost more investor favour in relative terms over the past decade.

In contrast, US Treasuries, have seen the strongest growth. The share of US government bonds increased by 5.5 percentage points to the current 11.6 percent. In the comparison of the top 10 issuers then and now, the US has overtaken French and Italian government bonds in German AIFs and currently ranks second behind German Bunds.

Additionally, the weighting of issuers from industrialised countries has decreased. In contrast, emerging markets as a whole have gained importance for German professional investors. The share of emerging market bonds increased from 13.6 percent ten years ago and to 17.2 percent today. In 2014, Mexico was still among the top 10 issuers, whereas the current top 10 includes only industrialised countries and supranational organisations (SNAT).

The analysis also shows that the weighting of individual bond investments is now more broadly distributed, indicating that investors have diversified their holdings more extensively. Ten years ago, the top ten issuers accounted for 78.1 percent of the total volume invested in government bonds, but this share has now decreased to 72.3 percent.