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.
We reduced risk, and gross exposure at the end of the month was 116 %. We stand firm in our view that the valuation difference between expensive defensive companies and, in many cases, cheap but more cyclical companies is too large. Nevertheless, we have reduced our short positions in several defensive names.
Fund manager comment
The performance of the Nordic stock markets was mixed in August. The Copenhagen exchange rose slightly, while other Nordic markets were somewhat down. The main theme this month was falling interest rates, and an increasing proportion of bonds are trading globally at negative rates. Nowadays, not only short-term interest rates are negative but really long-term bonds are in the same boat. For example, German, Swiss and Dutch 30-year bonds are trading with negative yields. There are several explanations, including soft statements from central banks, continued relatively weak macro data (especially leading indicators such as purchasing managers indexes), the ongoing trade war and technical flow effects given the shortage of bonds. The fall in interest rates to extreme levels, combined with the macroeconomic slowdown, continued to drive a strong sectoral rotation, with money flowing out of cyclical stocks and into defensives. The valuation differences between defensive stocks or cyclicals and growth stocks have not been greater since 2000.
Catella Nordic Long Short fell 1.31 % in August. The negative performance is mainly due to the sector rotation that took place during the month. Our short positions in ICA, H&M and Elisa, and our long positions in Storebrand and Hexagon, were the main negative contributors. The biggest positive contributions came from the fund's short positions in Vestas Wind, Veoneer, Assa, Thule and our long position in Novo Nordisk. We reduced risk, and gross exposure at the end of the month was 116 %. We stand firm in our view that the valuation difference between expensive defensive companies and, in many cases, cheap but more cyclical companies is too large. Nevertheless, we have reduced our short positions in several defensive names. We have also reduced the long positions in more cyclical companies, and the net exposure at the end of the month was -1 %.
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€.