The objective of the Catella Nordic Long/Short Equity fund is to deliver competitive returns regardless of market conditions.
The fund invests mainly in Nordic equities. 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, over time, to have low co-variation with the equity market and may thus both raise the expected return and lower the expected risk in a traditional equity and fixed income fund portfolio. The portfolio is structured in two parts, consisting of long and short equity positions respectively, which are both expected to contribute to the fund’s characteristics while jointly creating a favourable balance between risk and return. Investments are based on a combination of traditional equity research and quantitative methods. The fund’s target is to generate annual return of 5-10% with a standard deviation of 5-10% over time.
We have a great desire to make a comeback!
The weakness of Nordic stock markets persisted in November. Only the Danish exchange showed a positive outcome. The Vinx Nordic equity markets index fell 1.9 percent.
Catella Nordic Long Short IC fell 9.38 percent this month. The main reason for this downturn was that our long holdings in cyclical sectors significantly underperformed the market. Since the return in October and November has been weak, we have chosen to reduce the risk in the fund. This has been achieved by both reducing long positions (primarily in energy, industry and materials) and increasing our short positions. As a consequence, the gross and net exposures of the fund have also been reduced. We believe that our long positions remain attractively valued and, if anything, the stock market downturn has bolstered this. On the short side are mainly over-priced companies with weak profit updates. When it comes to our view of the market, it would be easy to say that this downturn is just like others we have seen in recent years, but it is important not to be overconfident since large stock market falls have historically been an early indication of a weaker economy.
We are disappointed with this year's performance, and we are working hard to get back up again. Increasing the gross exposure over time and reducing the net exposure are at the forefront of our minds.
We have a great desire to make a comeback!
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.
We have drawn on the experience of our Catella Hedge multi-strategy fund and created Catella Nordic Long Short Equity.
Catella Nordic Long Short Equity strives to consistently deliver positive returns in which the balance between risk and reward, the risk-adjusted return, is competitive. The objective is to manage an equity portfolio that provides unit holders with positive returns in both rising and falling markets through a portfolio that has a high correlation with the stock exchange in a rising market and low correlation in a declining market. The fund invests primarily in equities listed on the Nordic exchanges.
Strategies with long and short equity positions are characterised mainly by their ability to generate good asymmetric returns. Compared with portfolios containing only long positions, a long/short portfolio can protect investors from the consequences of protracted periods of falling stocks. The fund is able to deliver good returns in a positive equity market as well as in a negative equity market.
The fund is suitable for investors who are looking for Nordic equity exposure and a fund that takes advantage of both positive and negative developments in the stock market.
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.
Target return: Absolute return with a good risk-adjusted return
The fund is a Luxembourg-listed UCITS fund and is traded daily. The minimum deposit is SEK 10 million. If you are interested in investing a smaller amount please refer to Catella Nordic Long Short Equity RC.