Bot people, this is where Italians invest in search of returns

Investors who accumulated Italian Treasury bills between the 1970s and 1990s, known as Bot people, had not seen such high returns in a long time.
An entire generation has entrusted their savings to these financial instruments, considered a safe haven for capital thanks to the relative absence of risks.
Now the bond market is extremely liquid again and the high returns with low risk are attracting the attention of many savers.
While we await the assessments of the rating agencies and observe the global context, we take stock of the BOT market, analyzing the most traded securities today by investors looking for returns.
Bot people, here's where Italians invest in search of returns Bot at auction Investing in Bot in the short or long term? The recipe for a diversified portfolio The most traded Bots in this period Bots on auction The Ministry of Economy and Finance recently announced an auction for Thursday 26 October 2023, with the issuance of Bots with six-monthly maturity for an offered amount of 3 billion euros.
Currently, the six-month Bots in circulation amount to 24.967 billion euros.
These Bots represent an attractive investment option for many, but is a return to the same levels of safety and profitability of past years possible? The yield on the Bots is currently 3.9%, before the substitute tax of 12.50%.
This is a figure taken from the latest issue, expiring before mid-October 2024.
Comparing this figure with the yield on 10-year BOTs, which stands slightly below 4.8%, a relatively modest gap emerges.
Proportionately, those who invest in the short term appear to be better rewarded.
But what does this situation tell us about possible future developments in interest rates? Investing in Bots in the short or long term? The fundamental question is whether it makes sense to focus entirely on investments in bots.
In general, the best approach is to diversify your portfolio, spreading investments over different maturities to thus reduce duration risk.
Furthermore, it is advisable to consider issues that offer profitability at an acceptable level.
However, currently, there are two global factors that favor short-term investments.
Firstly, there is the wait for the ratings agencies' assessments of Italian public debt, with attention focused on the decision by the US Moody's, expected in the second half of November.
Secondly, the recent escalation of tensions between Israel and Palestine could have negative effects on financial markets.
Therefore, an investment strategy in Bots and securities with short-term maturities could be a choice to consider.
read also BTP, buy or sell today? Waiting for the rating agencies The recipe for a diversified portfolio A balanced portfolio of BOTs and government bonds with short and long-term maturities could represent a wise solution.
This type of diversification would help ensure a degree of stability while offering the ability to access liquidity at key times.
The return on short-term securities may be slightly lower than long-term securities, but this strategy can offer greater peace of mind.
While inflation remains high, investing in government bonds, even long-term, can help preserve capital, but offers minimal real gains.
Therefore, diversifying your portfolio between Bots and securities with maturities of various lengths could be a winning strategy.
Furthermore, if the economy were to fall into a recession and the ECB was forced to make cuts, portfolios allocated to fixed income would benefit from falling interest rates.
The most traded Bots in this period In this context it is interesting to analyze the most traded Bots at the moment.
Here are some of the most relevant securities: Title ISIN PRICE Quantity Yield BOT 14.02.24 (IT0005532988) Price: €98.83 Quantity (millions): 639508 3.86 gross to maturity BOT 28.03.24 (IT0005566184) Price: €98.317 Quantity ( million): 871985 4.02 gross at maturity BOT 12.04.24 (IT0005542516) Price: €98.182 Quantity (millions): 1023255 3.95 gross at maturity BOT 14.06.24 (IT0005549388) Price: €97.513 Quantity (millions): 631842 4.01 gross at maturity BOT 14.10.24 (IT0005567778) Price: €96.289 Quantity (millions): 2489789 3.92 gross at maturity The growing demand for bonds, seen with an increase of 16.4% in August and 16, 9% in September compared to the previous year, indicates an increasingly greater interest among investors in medium/long-term returns.
At this stage, it is essential to plan portfolio reorganization strategies that include Italian government bonds.
The option of balancing investments between bots and securities with longer duration could be a wise choice.
This trend is also reflected in the United States and Germany, where the yield curve is inverted: those who invest in one year are paid more than those who invest in ten.
The market therefore seems to anticipate a future with falling rates.

Author: Hermes A.I.

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