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.
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.
The main positive contributors to the month's return were the long holdings in Hexagon, Volvo and Stora Enso.
Fund manager comment
Nordic stock markets recovered in June, partly driven by the ECB and the Fed, which signalled future monetary policy easing, and by hopes of renewed trade talks ahead of the G20 meeting. The Stockholm stock exchange recorded an upturn including dividends of 6.8%, and the other Nordic stock exchanges also rose but not as much as Stockholm. Nordic stock market indexes rose on average by around 5%. The trend of continued weak macro data also continued, with lower purchasing manager indexes in the US and the euro zone. The fall in interest rates in both the US and Europe during the month was notable, and the stock market is being driven by the fact that interest rates have now become so low that the stock market looks attractive compared to bonds, even in a weaker economic scenario. Moreover, there is a chance that interest rate cuts or trade agreements will lead to an improvement next year.
Catella Nordic Long Short fell 0.36 % this month. Net exposure was negative, which contributed to the weak performance. The main positive contributors to the month's return were the long holdings in Hexagon, Volvo and Stora Enso. The fund's short positions in Getinge, Assa and Elisa reduced the return. Small changes were made to the portfolio during the month. We sold the holding in security company GFS and reduced the fund's short position in Getinge. Gross exposure amounted to 132 % at the end of the month. The valuation spread between expensive defensive companies and the often cheap but more cyclical companies is far too great, in our opinion. We are respectful that many investors try to hide in defensive companies in times of economic turmoil, but believe that the difference in valuation creates an asymmetric range of outcomes. If the economy continues to weaken, the defensive companies will also find it difficult to yield positive returns, and in a situation when the outlook is expected to shift for the better, there is great potential in cheap but more cyclical companies.
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 Long Short Equity is an alternative equity fund with a Nordic focus that can perform in both upturns and downturns. It has lower risk than the stock market and should deliver a competitive return. The fund is managed by our hedgeteam.
The fund is suitable for investors seeking equity exposure with the opportunity to also make money in a falling 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 daily traded UCITS fund. The minimum deposit is 100 SEK/10€.