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.
Although market interest rates turned slightly upwards, long-term interest rates remain so low that equities are attractively valued in relation to bonds. This supports stock market growth despite weak macro data. The Swedish Riksbank moved in the opposite direction and promised to raise the interest rate to zero in December.
Fund manager comment
Nordic stock exchanges showed mixed performance in October. Oslo fell 1.8% while Stockholm was up a strong 4% (SIXRX). Copenhagen and Helsinki were up 1.8% and 0.7% respectively. The MSCI Nordic index rose 1.5% in euros. The main theme in October was a mini trade deal between the US and China that gave some hope for world trade. This helped the stock market to overlook weak macro indicators like the purchasing manager's index, and the US stock market rose to a new all-time high. Central banks also contributed to the stock market optimism. The Federal Reserve lowered interest rates and, in particular, once again began to expand its balance sheet with increasingly large repos in the market. Although market interest rates turned slightly upwards, long-term interest rates remain so low that equities are attractively valued in relation to bonds. This supports stock market growth despite weak macro data. The Swedish Riksbank moved in the opposite direction and promised to raise the interest rate to zero in December. This resulted in some krona appreciation in October. The stock exchange was also affected during the period by the Brexit discussions.
Catella Nordic Long Short fell 2.47% this month. This weak performance was underpinned by a series of reports that were unfavourable for the fund. The main negative contributors to the month's return were the short positions in Alfa Laval, Getinge, Evolution Gaming and Atlas Copco, which all performed strongly on reports that were better than expected. The main positive contributors were the fund’s short position in Nokia and the long positions in Storebrand and Hennes & Mauritz. The lack of positive reports on our long side was the fund’s biggest problem this month.
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€.