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.
The objective of Catella Hedgefond is to achieve stable returns at low risk, regardless of market conditions.
The fund invests mainly in Nordic equities and 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, fossil fuels, or weapons. Derivatives are used in management to protect fund capital and increase return opportunities. The fund is expected to have low co-variation with performance in the equity, credit and bond markets and may thus both raise the expected return and lower the expected risk in a traditional equity and fixed income 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 fund's target is to generate annual return of 3-5% with a standard deviation of 3%.
Catella Hedge rose + 2.29% in October and the fund passed high water mark. The largest positive contribution came from long equity positions.
Fund manager comment
Catella Hedge rose + 2.29% in October and the fund passed high water mark. The largest positive contribution came from long equity positions, while short equity positions and index futures contributed marginally negatively. The best equity position was Addtech, which reported strong organic growth (10%) and marginal expansion. Both Epiroc and Wallenius Wilhelmsen benefit from the fact that strong raw material prices drive investments in mines, Epiroc manufactures equipment and Wallenius Wilhelmsen ships it to customers. The worst position was the index hedge, followed by Mycronics where reports were disappointing and Ambea was hit by political unrest.
Catella Hedge still has low net exposure to the market, approx: 7% net long. Admittedly, the stock market is supported by negative real interest rates, but valuations have climbed to high levels and with future austerity measures from the central banks, the timing feels wrong to increase net exposure. The return has come from alpha during the month. We have had low activity during the period when we, overall, are satisfied with the portfolio, but a few companies that delivered report disappointment have been cleared out.
The Nordic stock markets climbed in October, the MSCI Nordic Index rose 2.7% in SEK and all stock markets rose in local currencies. The krona strengthened significantly against the euro, which caused the Finnish stock market to fall somewhat in terms of kronor. Inflation expectations rose further during the month to the highest levels we have seen in many years. Commodity and energy prices also continued to generally rise during the month and container freight rates remain at high levels. The economic statistics were generally good and slightly better than in September, which calmed the stagflation concerns and gave the stock markets a boost. With continued negative real interest rates, equities still appear to be a decent alternative to bonds. The market shook off concerns about the possible effects of upcoming tapering (that the Federal Reserve will reduce bond purchases) and credit problems in China. The end of October was marked by the Q3 reports, which, in several cases, gave large movements for individual shares but meant that the market as a whole was calmer.
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.
Catella Hedgefond fund's objective is to deliver consistent, positive returns regardless of stock market trends.
To make money in both market upturns and downturns, the fund managers invest in Nordic fixed-income securities and equities, and gain protection from downturns through derivatives. This means that timing is not an issue when investing in Catella Hedgefond, and low risk is a cornerstone of the fund. The fund is run by a total of four managers. The team's experience and knowledge generate the management performance.
The fund is traded daily, making your money normally available immediately. Over time, the fund has had a high risk-adjusted return. This is a fund for investors seeking a solid base for their savings.