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%.
On the upside were Ovzon, with a strong news flow during the month, and Elekta, where we established a position ahead of a particularly strong report.
Fund manager comment
May brought a big setback for stock exchanges after the strong start to the year. Stockholm fell by as much as 8% this month, making it the weakest Nordic index. Norway and Denmark did better, with losses of between 3% and 4%. Most focus was on the escalating trade conflict, with increased tariffs against China, as well as the introduction of extensive sanctions against telecom equipment supplier Huawei for security policy reasons. However, it is worth noting that forward-looking macro indicators in all major geographies came in weaker during the month, thus fuelling the anxiety about the economic situation. The cyclical concerns made their mark in lower interest rates and falling commodities, which had managed relatively well until now. Sectorally, this led to engineering and commodity industries losing out on the stock market.
When Trump announced additional tariffs against China in early May, we chose to make a small adjustment in the fund's net to ensure that we did not have any undesirable beta towards the stock market. This meant that we showed a clear negative correlation with equities during the month, and even though the return was positive during the initial stock market fall, we had weak returns on some large core holdings like Boozt and Ambea in May. In addition, the short side did not provide the expected return since we have had an overweight of expensive growth stocks – a category that had a tremendously good relative returns in the stock market decline, but which we believe will perform worse in a normalised stock market environment. On the upside were Ovzon, with a strong news flow during the month, and Elekta, where we established a position ahead of a particularly strong report. Our positive view of the medium-term earnings capacity and potential returns for Ambea and Boozt is unchanged.
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.