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.
A number of small sales and purchases of corporate bonds were made in order to enhance diversification of the fund.
Fund manager comment
The net asset value of the fund rose by 0.18 % in September. Market interest rates rose, currency markets stabilised and the krona strengthened. The fund sold interest rate risk and its duration was 0.3 at the end of the month, compared with 2.9 at the start. A number of small sales and purchases of corporate bonds were made in order to enhance diversification of the fund. The investments in corporate bonds gave a positive contribution to fund returns this month.
The US Federal Reserve is likely to continue to raise its policy rate, but the increasingly flat yield curve, the difference between shorter and longer maturities, indicates that monetary policy is already relatively tight. An inverted yield curve, higher interest rates for shorter maturities over longer ones, has historically meant a recession with about a 12-month warning. We are not there yet, but caution is called for. The so-called portfolio channel of rising asset prices has been an important stimulus for both companies and households ever since the recession of 2009. Falling asset prices would at present be a worrying sign for the economy. The threat of a trade war has clearly had an adverse impact on the market, and even if a "solution" means higher tariffs, this could be welcomed by the market as uncertainty is something that impacts both consumption and investment decisions.
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 was also nominated for Best UCITS Fund in Europe 2013 by Eurohedge, the financial world's Oscars. 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.