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%.
The fund’s gross exposure remains at the upper end of its historical range, and we see opportunities to further increase equity exposure in a market-neutral manner.
Fund manager comment
The stock market’s year ended on a high, with gains in December of between 2.7% (Sweden) and 4.1% (Finland) for the Nordic indices. Although macroeconomic indicators were mixed during the month, sector rotation towards cyclical stocks continued, driven largely by the partial US-China trade deal. However, the strongest performers were banks and energy companies, pushed up by higher market interest rates and rising commodity prices. As we described in November, we have a more hesitant attitude towards strength of the cyclical recovery scenario and the valuation of many companies in the segment. It is also worth noting in this context that the krona’s long trend of weakening seems to have been broken, although 2020 began with a downturn in the currency. The fund’s gross exposure remains at the upper end of its historical range, and we see opportunities to further increase equity exposure in a market-neutral manner. The fund’s net clearly increased in December, which was driven by higher exposure to preferred capital in real estate companies to replace exposures that will be redeemed during 2020, and only negligibly contributes to the market risk. The fund currently has a slight negative correlation with the stock market.
Catella Hedgefond rose 1.18% in December. The return was driven mainly by stronger performance for long equity holdings and limited losses on short positions and forward derivatives. The credit side also made a positive contribution to the total return. The winners among the fund’s major holdings included Ambea (+8%), which recovered from the previous month’s activity when a major shareholder sold a big stake, and Nordea (+12%), which led the strong performance of the Swedish banking sector in December. Nordea’s rise also pulled up the bank’s controlling shareholder, Finnish financial conglomerate Sampo, which rose 6%. On the downside, the biggest negative contribution was from a short position in Atlas Copco (+6%), which continued to do well this month.
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.