Catella Avkastningsfond is a fixed income fund whose target is to achieve stable return at low risk.
The fund invests in Nordic corporate and government bonds, with emphasis on investment grade corporate bonds. The fund applies negative screening for sustainability criteria and consequently avoids long positions in companies that produce tobacco, alcohol, commercial games for money, pornography, coal, oil or weapons. Derivatives are used in management to protect fund capital. Over time, the fund's returns will co-vary with the Nordic bond market. Investments are based on fundamental analysis of individual companies and traditional macroanalysis. Composition of the fund reflects Catella's outlook on the conditions for generating return in relation to risk in respect of credit and interest rate risk.
The fund sold interest rate risk and its duration was subsequently 0.2 at the end of the month, compared with 2.4 at the start.
Fund manager comment
The net asset value of the fund decreased by 0.17 % in September. Market interest rates rose, currency markets stabilised and the krona strengthened. The fund's investments in corporate bonds gave a positive contribution to the returns but did not offset the negative impact on the portfolio of rising market interest this month. The fund sold interest rate risk and its duration was subsequently 0.2 at the end of the month, compared with 2.4 at the start. Otherwise, there were only minor adjustments to the portfolio.
The US Federal Reserve is likely to continue to raise its policy rate, but the increasingly flat yield curve, the difference between shorter and longer maturities, indicates that monetary policy is already relatively tight. An inverted yield curve, higher interest rates for shorter maturities over longer ones, has historically meant a recession with about a 12-month warning. We are not there yet, but caution is called for. The so-called portfolio channel of rising asset prices has been an important stimulus for both companies and households ever since the recession of 2009. Falling asset prices would at present be a worrying sign for the economy. The threat of a trade war has clearly had an adverse impact on the market, and even if a "solution" means higher tariffs, this could be welcomed by the market as uncertainty is something that impacts both consumption and investment decisions.
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.
Catella Avkastningsfond is an actively managed fixed-income fund which invests in corporate bonds with rating investment grade, high yield as well as non rated bonds. The fund may also invest in derivative instruments to, for example, protect the capital in the fund, and may use currency derivatives, such as through the purchase or sale of foreign currency on a forward basis, in order to hedge its holdings. It has a history dating back to 1999, with low risk, consistent returns and positive annual returns in every year. In short, existing investors in the fund have received good rewards for their risk.
The fund is suitable for investors seeking an actively managed fixed-income fund that invests in both the money market and the bond 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, in accordance with Chapter 5, Section 8 of the Swedish Securities Funds Act (SFS 2004:46).