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.
An actively managed fund that offers corporate bonds issued in the Nordic region. The fund is able to perform in both rising and falling interest-rate markets.
Catella Corporate Bond Flex is a fund whose objective is to deliver competitive risk-adjusted return. The fund invests in Nordic corporate bonds, both investment grade and high yield, and government bonds. The fund applies negative screening for sustainability criteria and we consequently avoid long positions in companies that produce tobacco, alcohol, commercial games for money, pornography, coal, oil or weapons. Derivatives are used in management to protect fund capital. Over time, the fund's returns will co-vary with the Nordic corporate bond market. 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. Composition of the fund reflects Catella's outlook on the conditions for generating return in relation to risk in respect of credit and interest rate risk.
The fund's exposure to corporate credits explains the strong development.
Fund manager comment
The fund rose in the benign environment by +1,6 % in August. The fund's exposure to corporate credits explains the strong development. The fund's duration was 1,1 years at month end. Only minor portfolio adjustments were made during the month.
The risk sentiment during the month was positive and was driven primarily by a sharp rise in technology related shares. The financial markets were driven by continued monetary and fiscal stimulus, societies that are opening up with a gradual recovery for the economy. Our opinion is that the risk for setback is large, but in the end, we expect central banks to win the battle.
During the month the US central bank signalled that the tolerance to higher inflation is high and that lower unemployment and stronger growth now is the main focus for the monetary policy. Given that monetary policy during the last decade has had difficulties in achieving the inflation target, one need to ask oneself if a higher inflation target has any practical meaning.
As long as central banks continue asset purchases and de facto buy more bonds than what are being issued, our picture is that corporate credits will continue to find themselves in a benign environment. The main threats in the near term is the geopolitical development with the US elections during the autumn, together with bubble tendencies in parts of the asset markets. In the longer term the economic development is decisive, and one should pay attention to that fiscal policy is not sustainable in the long term, but what is needed is both stronger growth and higher inflation. The crucial question for financial markets is then how central banks act if growth and inflation surprise on the upside.
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. Category 1 does not mean that the fund is risk free. The fund may over time move towards the left or right of the scale. This is because the indicator is based on historical data which is not a guarantee of future risk and reward. For information about the risk classification of each fund, please refer to the fund’s key investor information document.
Catella Nordic Corporate Bond Flex is an actively managed alternative fixed-income fund that is able to perform in both rising and falling interest-rate markets. The fund has a flexible toolkit, which means that it can easily allocate between different fixed-income asset classes.
Unlike traditional fixed-income funds, Catella Corporate Bond Flex has the potential to parry rising interest rates.
The fund is permitted to use derivatives and to have a larger percentage of the fund invested in bonds and other debt instruments issued by individual central government and municipal authorities and within the EEA than other securities funds.
The fund is suitable for investors seeking a higher risk and the potential for higher returns than traditional fixed-income savings.
Catella Nordic Corporate Bond Flex is a daily-traded alternative UCITS fixed-income fund registered in Luxembourg. Minimum investment: SEK 10 million. If you are interested in investing a smaller amount, please see Catella Nordic Corporate Bond Flex RC.