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.
Concerns intensified in world financial markets during February as reported cases of coronavirus rose outside China.
Fund manager comment
The fund fell by 0.48 % in February. Behind the weak performance was our overly optimistic view of the economy. Both the fund’s credit exposure and its interest rate risk exposure reduced the return. Although we continue to believe that interest rates are too low and the likelihood of fiscal policy measures is substantial, the fund’s short-term interest rate risk was closed and the duration at the end of the month was 0.8 years. The fund’s credit exposure did not change significantly during the month.
Concerns intensified in world financial markets during February as reported cases of coronavirus rose outside China. The big question now is not whether growth will be weaker in the coming months, but how big the impact will be on companies' cash flows. We believe the financial markets are now largely pricing assets on the estimated probability of recession. If we look at the movements in the market, fixed income is furthest ahead in its assessment of the likelihood of a recession, much of which is driven by the US where expectations of interest rate cuts to 0.5 % during the year are high. In Europe and Sweden, the main monetary policy response will probably not be lower policy rates but increased asset purchases. We are fast approaching a situation where the ability of monetary policy to stimulate the economy is small, and the policy response then available is fiscal. Given that the United States will have presidential elections this autumn, tax cuts should come in the near future to support economic development. Fiscal policy in combination with asset purchases is likely to be a powerful combination, but not without risk. The generally high indebtedness in the world economy is sensitive to higher interest rates, which is something that the financial markets are currently unable to cope with.
Our belief is that as long as confidence in central banks remains high, there is support for the market. That said, the current situation is difficult to assess and depends on how the coronavirus spreads.
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.