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.
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.
Worries around a second wave of the corona virus together with uncertainty around the US presidential election led to a weak risk sentiment during the month.
Thomas Elofsson, 2020-10-31
Fund manager comment
The fund rose by 0,58 % in October. More than the increase of the whole month came from the fund's holdings in bonds issued by the finance company Lowell, that among other things has bought Intrum's Norwegian business as well as Lindorff's Swedish, Danish and Finnish business. Lowell refinanced the outstanding bonds and the main owner injected new equity. In general there were small movements during the month with small activity. The fund's duration was 1,7 year at month end. Only minor portfolio adjustments were made during the month.
Worries around a second wave of the corona virus together with uncertainty around the US presidential election led to a weak risk sentiment during the month. Despite falling equity markets internationally and wider credit spreads in October was a calm month in the Swedish fixed income and credit markets. A second wave of corona and smaller (or larger) restrictions of mobility in societies will obviously affect the economic development negatively.
Central banks have already prior to this second wave signalled that the economic recovery risks being weaker than expected. Our expectation is now that the market expects more monetary stimulus during the last quarter of the year. Without the "Christmas gifts" from central banks, the markets are vulnerable, but the central banks as well aware of this and won't disappoint markets.
The main threats in the near future is the second wave of covid virus spread. In the long run the economic development is decisive and the unsustainable fiscal policy. As long as the confidence for central banks is high, this is not a problem, but without higher growth as well as higher inflation to solve the high unsustainable levels of debt in the world economy will be decisive for the for the world's global financial markets.
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.
