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 assessment is that we have seen the worst of the Covid-19 epidemic in the developed part of the world, and that the focus among decision-makers will gradually shift towards opening up our societies and alleviating the economic impact of the infection.
Fund manager comment
In one of the most extreme stock market crashes in modern times, with the Stockholm stock exchange losing a third of its value in just seventeen trading days, March ended overall with a fall of 11.2%. The Danish index did best (-4.5%), while Norway (-14.8%) and Finland (-15.6%) were hit harder. The abrupt and dramatic course of events is naturally explained by the fact that Covid-19 spread more widely in the United States and in Central and Southern Europe than it did in China, South Korea and other Asian countries, and by the enormous real economic impact expected from the actions taken. Macroeconomic statistics received after the end of March clearly indicate that the world is in a deep recession. Massive and unprecedented stimulus – both fiscal and monetary – has restored basic function to certain market segments, but long-term interest rates and credit spreads have not been significantly affected.
Catella Hedgefond fell 14.4% this month, with weak results from all sub-portfolios. The high-yield portfolio was hit hard as credit spreads rose violently during the month, and in the Nordic market many fund management companies, not including Catella, chose to suspend dealings in funds with corporate bonds due to difficulties in assuring valuations. In the equities component, the fund has for many years maintained an unhedged portfolio of preference shares and similar instruments that normally have low co-variation with the stock market, but which in this course of events have been hit hard by price declines. The purely market neutral share book has also performed very poorly as our selection of more value-driven investments once again underperformed short positions in companies with high valuations. The biggest negative contributors were long positions in Ambea, H&M, Wallenius Wilhelmsen and long interest-rate futures. The largest positive contribution came from short futures and options positions in OMX30.
Our assessment is that we have seen the worst of the Covid-19 epidemic in the developed part of the world, and that the focus among decision-makers will gradually shift towards opening up our societies and alleviating the economic impact of the infection. The real economy, at both macro and micro levels, is carrying a high degree of uncertainty. Despite the uncertain situation, we are maintaining a working hypothesis that implies a gradual recovery in the second half of the year and that the level of activity in the economy and affected sectors will begin to approach the 2019 level towards the end of 2021. Based on this scenario, we are trying to construct a portfolio that can benefit from this process of normalisation with limited risk and market exposure. Most concretely, we can see potentially very attractive opportunities for returns on corporate bonds and hybrid capital assets since we believe that most companies have a good ability to survive and the maturities are relatively short. For the equity component, we believe that generally increasing optimism and thus a shift from the most defensive assets would favour our positioning.
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.