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.
The tug of war between the weaker economic development, on the one hand, and monetary and fiscal stimulus on the other hand will affect financial markets over the foreseeable future.
Thomas Elofsson, 2020-05-31
Fund manager comment
The fund rose in the beneficial environment by 1,0 % in May. The fund's holdings in corporate bonds was the main explanation to the strong development. The fund's duration was 3,3 years at month end. The fund's credit exposure increased marginally during the month.
The tug of war between the weaker economic development, on the one hand, and monetary and fiscal stimulus on the other hand will affect financial markets over the foreseeable future.
Stronger bourses and credit markets together with relatively unchanged interest rate levels show that stimuli are more important than economic data in the market for the time being.
Our opinion is that the risk for setback is large, but in the end we expect central banks to win the battle. Fiscal policy combined with asset purchases is likely a powerful combination, but not without risk. The high levels of debt in the world economy is sensitive for higher rates which is something the financial markets can't cope with for the time being, Given the rapidly increasing deficits means that that supply of government bonds will increase dramatically and could lead to higher interest rates. The demand for these bonds is probably quite low from many investors given that the return potential is very limited. So far, the central banks have de facto bought more bonds than are being issued, but as equity markets approach all time high levels, we expect central banks to gradually decrease their asset purchases.
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.
