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, coal, 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%.
Our tactical view is that leading indicators are facing a turnaround and that they have, to some extent, been driven down too deeply by technical effects in, among other areas, the automotive sector, and because of Brexit.
Fund manager comment
Following the intense rotation towards value stocks in September, we reduced our exposure during the second half of the month. We continued to reduce exposure following the weak ISM figure (purchasing statistics) published in the US on October 1. Our tactical view is that leading indicators are facing a turnaround and that they have, to some extent, been driven down too deeply by technical effects in, among other areas, the automotive sector, and because of Brexit. Continued downgrades to car production and the weak US purchasing statistics clearly make us more cautious. Our main scenario for the economy is a gradual turnaround, but the situation is more fragile than it has been for a long time, and in either case stock exchange gains will need to be further revised downward. For example, in the US we are on our way into a profit recession − a situation that normally cannot be combined with an all-time high on the stock exchanges.
After weaker performance in August, Nordic stock exchanges generally rose in September. Finland (+4.5%) and Sweden (+3.7%) were the leading countries, while the Danish equity market (0.7%) was weaker because of its overweight of defensive stocks.
Macro key indicators generally showed a weaker trend this month, driven by declining purchasing manager indexes in both the US and Europe. The Chinese Caixin index stood out as more positive, helping the global purchasing manager index to rise for the first time in 15 months. In response to the macroeconomic weakening that has been going on for some time, the Federal Reserve reduced its funds rate by 25 basis points and the ECB cut its deposit facility rate by 10 basis points. But this easing proved insufficiently proactive to further drive down long-term market rates, and these generally rose this month.
The first half of September was characterised by sharp rotation back to value factors from growth/momentum factors, mainly driven by hopes of central bank stimulus and a slightly better global PMI. The rotation stopped in the middle of the month when the rising interest rate trend broke.
Catella Hedgefond rose 0.6% this month, primarily driven by long equity exposures. But it is also notable that our short exposures did not contribute negatively despite the strong stock market growth. The fixed income side of the portfolio contributed negatively in an environment of rising interest rates as the fund’s excess liquidity was invested in risk-free assets with longer maturities. On the positive side, it was especially bank shares that contributed to the return. The fund has taken a long position in Nordea for the first time in three years as we see an upside from management changes and new targets to be published on October 24.
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.