Investments in fund units are associated with risk. Past performance is no guarantee for future returns. The money invested in a fund can increase and decrease in value and it is not certain that you will get back the full amount invested. No consideration is given to inflation.
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.
All in all, we still believe that the return potential is greater for riskier investments, and that more creditworthy companies, known as investment grade, have lower prospects of generating returns next year.
Fund manager comment
November was a relatively quiet month for interest-bearing assets. Swedish rates rose slightly during the month due to the anticipated Riksbank hike in December.
Market expectations that global growth will improve next year, combined with continued monetary stimulus from the major central banks, led to positive risk sentiment during the month and good development for corporate bonds.
The Swedish krona strengthened in November. We believe that 2020 may be the year when policy is shifted in a direction that entails more fiscal stimulus, in both Sweden and the rest of Europe. The United States will hold presidential elections, and a likely scenario is that there will be a contest for which of the candidates can promise the most fiscal stimulus. Big budget deficits will lead to a greater supply of government bonds and, in a situation where central banks are already buying a large part of the net supply of bonds, this is likely to lead to upward pressure on long-term interest rates. A better economy usually leads to a lower probability of payment defaults on corporate bonds, resulting in lower credit spreads. Against this, higher interest rates, which should follow from stronger business activity, risk putting upward pressure on credit spreads from today’s historically low levels.
All in all, we still believe that the return potential is greater for riskier investments, and that more creditworthy companies, known as investment grade, have lower prospects of generating returns next year. That said, there is no shortage of risk. We do not think this is a situation when one should be too risk tolerant. Consequently, we intend to continue to strive for a well-diversified portfolio with relatively short maturities in our credit investments and to continue to seek opportunities to be low or negative in interest rate risk in order to be able to generate returns in a situation when market rates go up.
The net asset value of the fund was unchanged in November. Credit exposure made a slight positive contribution to the fund's return, and interest rate exposure reduced the month’s performance. The fund’s duration was 0.12 years at the end of the month. Otherwise, only minor adjustments were made to the portfolio.
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).