An alternative equity fund that can perform in both upturns and downturns. Even out the ups and downs!
Fund manager comment
Catella Nordic Long/Short Equity fell 1.37 % in March, and Nordic stock markets also fell during the period. The best contributor to the fund's return was Borr Drilling, which after the successful acquisition of Paragon now has one of the world's most modern fleets of jack-up rigs. In a weaker market, the fund's derivative protection also made a positive contribution. On top of this, the fund had short positions in XXL and Clas Ohlson, which helped the return, partly when Clas Ohlson issued a very weak report in March. On the minus side was Outotec, which fell 10 % in SEK this month. Overall, cyclical names have had poor returns during the period.
The cognitive dissonance between macro numbers, growth forecasts and profit estimates on the one hand and market behaviour on the other hand is deafening. With such positive forecasts and rapidly increasing profits, especially in the United States, there should be support for rising share prices. The valuation of 12-month forward-looking earnings has decreased by several points; the US traded at p/e 18.5 at the start of the year and is now just over 16. The market has not been valued this low for three years. Despite this, marginally bad data has pushed down the market much more than significantly more positive data has pushed it up. Notwithstanding the asymmetry, our exposure to cyclically sensitive companies (which rely on positive data) has been very successful and we have generated much better returns this year than our net exposure would suggest.
In a weaker market, the fund's derivative protection also made a positive contribution.
The risk and reward indicator illustrates the link between risk and potential returns from an investment in the fund. The indicator is based on how the fund’s value has changed over the past five years. Category 1 does not mean that the fund is risk free. The fund may over time move towards the left or right of the scale. This is because the indicator is based on historical data which is not a guarantee of future risk and reward. For information about the risk classification of each fund, please refer to the fund’s key investor information document.
We have drawn on the experience of our Catella Hedge multi-strategy fund and created Catella Nordic Long Short Equity.
Catella Nordic Long Short Equity strives to consistently deliver positive returns in which the balance between risk and reward, the risk-adjusted return, is competitive. The objective is to manage an equity portfolio that provides unit holders with positive returns in both rising and falling markets through a portfolio that has a high correlation with the stock exchange in a rising market and low correlation in a declining market. The fund invests primarily in equities listed on the Nordic exchanges.
Strategies with long and short equity positions are characterised mainly by their ability to generate good asymmetric returns. Compared with portfolios containing only long positions, a long/short portfolio can protect investors from the consequences of protracted periods of falling stocks. The fund is able to deliver good returns in a positive equity market as well as in a negative equity market.
The fund is suitable for investors who are looking for Nordic equity exposure and a fund that takes advantage of both positive and negative developments in the stock market.
The fund is permitted to use derivatives and to have a larger percentage of the fund invested in bonds and other debt instruments issued by individual central government and municipal authorities and within the EEA than other securities funds.
Target return: Absolute return with a good risk-adjusted return
The fund is a Luxembourg-listed UCITS fund and is traded daily. The minimum deposit is SEK 10 million. If you are interested in investing a smaller amount please refer to Catella Nordic Long Short Equity RC.