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Catella Nordic Corporate Bond Flex RC

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 rose 0.39 % in October. Both credit and interest risk exposure contributed positively to this month’s outcome.
Thomas Elofsson, 2019-10-31

Fund manager comment

Although macro data remained weak, market sentiment was positive during the month, with stock exchanges and market interest rates rising, and good performance for corporate credits. The main factor behind the positive sentiment was the hope of a deal between the US and China. As expected, the US central bank lowered its policy rates and pumped liquidity into the money market during the month. It emphatically claims this should not be seen as quantitative easing. We believe you should call a spade a spade, and this is monetary policy stimulus, which, if it follows the historical pattern, should lead to rising stock exchanges and rising market interest rates. The Swedish central bank was very clear with its intention to leave negative policy rates behind it, and raise the repo rate to 0 in December. This decision has caused a lot of bitter comments from the market since neither growth nor inflation point to an increase. Our interpretation is that the Riksbank has (finally?) realised the detrimental effects of negative interest rates on the banking system and also, by extension, on the economy. This will have consequences, both for market pricing today and for how monetary policy will be conducted in case more stimulus is needed. We assume that the repo rate will now be raised to 0 in December and will be 0 or higher for the foreseeable future. We believe that Swedish interest rates need to be adjusted to reflect this. This means that fiscal policy is now the foremost weapon for stimulating the Swedish economy in the slowdown we are now seeing. The surplus policy needs to be abandoned, and we will see an increased supply of government bonds in the coming years. We regard this development as both likely and desirable. The dismal journey of the Swedish krona is now over and we are looking forward to a stronger Swedish currency in the coming years. In our estimation, the likelihood that the Riksbank will again lower interest rates below 0 is slight. Our picture is that the probability of continued quantitative easing in the form of bond purchases has thus increased.

The fund rose 0.39 % in October. Both credit and interest risk exposure contributed positively to this month’s outcome. The fund’s interest rate risk was reduced during the month and the duration amounted to -2.3 years at the end of the period. Otherwise, only minor adjustments were made to the portfolio.

Fund facts

Risk Indicator

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.

Fact

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: 100SEK/€10

Historical development

Fund manager

Sweden

Thomas Elofsson

Head of Portfolio Management, Fund manager, and acting CEO of the Company
Direct: +46 8 614 25 62
Sweden

Stefan Wigstrand

Fund manager
Direct: +46 8 614 25 58

Risk information

Investments in fund units are associated with risk. Past performance is no guarantee of 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 Catella Balanserad, Catella Credit Opportunity and Catella Hedgefond funds are special funds under the Swedish Alternative Investment Fund Managers Act (SFS 2013:561) (AIFM). Catella Sverige Aktiv Hållbarhet and Catella Småbolagsfond may use derivatives, and the value of the funds may vary significantly over time. The value of Catella Sverige Hållbart Beta may vary significantly over time. Catella Avkastningsfond may use derivatives and may have a larger proportion of the fund invested in bonds and other debt instruments issued by individual national and local authorities and within the EEA than other investment funds, in accordance with Chapter 5, Article 8 of the Swedish Investment Funds Act (SFS 2004:46). Catella Nordic Long Short Equity and Catella Nordic Corporate Bond Flex may use derivatives and may have a greater proportion of the funds invested in bonds and other debt instruments issued by individual national and local authorities and within the EEA than other investment funds. For more details, complete prospectuses, key investor information, and annual and half-yearly reports, please refer to our website at catella.se/fonder or phone +46 8 614 25 00.

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