Catella Småbolagsfond is an actively managed fund whose objective is to deliver return that is higher than the average among the Swedish small cap companies included in the Carnegie Small Cap Return index.
To achieve that end, the fund invests in a concentrated portfolio of carefully selected Swedish small cap equities that the managers consider undervalued. The analysis process behind the fund's investments is based on Catella's fundamental analysis and broad expertise on Swedish companies. 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.
Following the autumn’s share price collapse we still have a cautious view of the direction of the stock market, but we see continued potential in many of the smaller companies, not least where some valuations have quickly fallen too far.
Henrik Holmer, 2018-12-31
Fund manager comment
The market is in an uncertain position, with higher volatility than we have become accustomed to in recent years. Behind this lies concern about the economy, trade wars, higher interest rates and political uncertainty. We have not seen any signs so far that the economy and earnings growth will be as weak as many share prices suggest. Following the autumn's share price collapse we still have a cautious view of the direction of the stock market, but we see continued potential in many of the smaller companies, not least where some valuations have quickly fallen too far. Overall, we have reduced our cyclical exposure but still have holdings where we see potential going forward. We see attractive valuations in the commodities sector, particularly with SSAB, Holmen and Lundin Mining. Engineering is a large sector for the fund, where we see a lot of companies that should be re-valued upward. We are more cautious about consumption and have low exposure. We remain underweighted in real estate.
The year ended with sharply declining stock exchanges in December, and even though small companies generally outperformed large companies, the Carnegie Small Cap Index was down 5.6 %. The fund was down 6.7 % and there were two pieces of negative company-specific news. The holding in Hoist Finance was costly when its share fell 40 %. The company announced that the Swedish FSA's new interpretation of the European Banking Authority's capital requirement regulation would have a negative impact, and Hoist cancelled its dividends for 2018 and 2019. Camurus fell 30 % despite having received long-awaited approval to sell its formula for opiate addiction in the United States. The reason was that sales will not begin for two years, which is later than expected. The main positive contributions came from our IT holdings like IAR Systems and Mycronic, and from the underweight in SAAB.
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 Småbolagsfond invests in Swedish small caps and focuses on finding undervalued companies. Genuine stock picking, in other words.
The fund is intended for investors seeking exposure to Swedish small caps, with a higher expected return than the Swedish stock market indices and who have an investment horizon of at least five to seven years. The fund is permitted to use derivatives and the net asset value of the fund may fluctuate considerably.
