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Catella Credit Opportunity

An actively managed fixed-income fund with a focus on corporate bonds issued in the Nordic countries. With its broad mandate, the fund has a bigger toolbox to better adapt to different market scenarios. The fund invests across the entire fixed-income capital spectrum.

The fund invests mainly in Nordic fixed income securities. 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, or weapons. Derivatives are used in management to protect fund capital and increase return opportunities. The fund is expected, over time, to have low co-variation with the equity market and may thus both raise the expected return and lower the expected risk in a traditional equity and fixed income fund portfolio. In structuring the portfolio, strong emphasis is placed on spreading risk and preventing any individual holding or sector from having excessive influence on fund performance. Investments are based on fundamental analysis of individual companies and traditional macroanalysis. The risk level will vary depending on Catella’s assessment of prevailing market conditions. The fund’s target is to generate annual return of 3-5 % with a standard deviation of 5% over time.

Market interest rates rose, thus depressing the return, while the fund’s holdings in corporate bonds gave a positive contribution.
Thomas Elofsson, 2018-07-31

Fund manager comment

The net asset value of the fund fell 0.15 % in July. Market interest rates rose, thus depressing the return, while the fund’s holdings in corporate bonds gave a positive contribution. The Swedish central bank met this month, and its board remains divided. The bloc led by Governor Stefan Ingves is recommending continued patience. We believe that the expected rate increases at the end of the year will be postponed into next year if services inflation does not accelerate during the coming months. There were no major changes to the portfolio this month.

Signals of weaker growth momentum and falling commodity prices are challenging our view of stable growth and reduced deflationary risks during the second half of the year and next year. The US Fed 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.

Fund facts

Risk Indicator

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 or the highest permitted risk for the fund. Category 1 does not imply that the fund is risk-free. Over time, the Fund’s risk indicator may change both upwards and downwards. This is because the indicator is based on historical data for the Fund’s model portfolio, which is not a guarantee of future risk/reward.

Fact

Catella Credit Opportunity is designed to meet a challenging interest-rate environment and to be better able to adapt to different market scenarios.

The fund is an absolute return special fund and has a focus on fixed-income securities. The fund has a broad investment mandate, which allows investments across the entire fixed-income capital spectrum. At least 50 percent of the fund's assets are invested in Nordic holdings.

The fund invests predominantly in owned bonds, convertible debentures, preference shares and cash management. The fund's independence of any benchmark allows for business-based and flexible decisions. The fund uses derivatives both opportunistically and to protect its capital against the two primary risks, interest-rate risk and credit risk.

The fund is a further development of the successful and award-winning Catella Nordic Corporate Bond Flex fund. The new fund has an even broader management mandate and takes more risk in its investments, but also has greater potential to make use of derivatives for protection.

Historical development

Fund manager

Sweden

Thomas Elofsson

Head of Portfolio Management and Fund manager
Direct: +46 8 614 25 62
Sweden

Stefan Wigstrand

Fund manager
Direct: +46 8 614 25 58

Risk information

Investments in fund units are associated with risk. Past performance is no guarantee of 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. The Catella Balanserad, Catella Credit Opportunity and Catella Hedgefond funds are special funds under the Swedish Alternative Investment Fund Managers Act (SFS 2013:561) (AIFM). Catella Sverige Aktiv Hållbarhet and Catella Småbolagsfond may use derivatives, and the value of the funds may vary significantly over time. The value of Catella Sverige Index may vary significantly over time. Catella Avkastningsfond may use derivatives and may have a larger proportion of the fund invested in bonds and other debt instruments issued by individual national and local authorities and within the EEA than other investment funds, in accordance with Chapter 5, Article 8 of the Swedish Investment Funds Act (SFS 2004:46). Catella Nordic Long Short Equity and Catella Nordic Corporate Bond Flex may use derivatives and may have a greater proportion of the funds invested in bonds and other debt instruments issued by individual national and local authorities and within the EEA than other investment funds. For more details, complete prospectuses, key investor information, and annual and half-yearly reports, please refer to our website at catella.se/fonder or phone +46 8 614 25 00.

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