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 Net 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.
We retain a cautious stance on stock market performance following this month’s price drops, but we see potential in many of the smaller listed companies, especially as valuations have in some cases fallen too far over a very short period.
Henrik Holmer, 2018-10-31
Fund manager comment
We retain a cautious stance on stock market performance following this month's price drops, but we see potential in many of the smaller listed companies, especially as valuations have in some cases fallen too far over a very short period. The fund has reduced its exposure in the IT sector, but still has strong exposure to profitable tech companies with good growth. We see attractive valuations in the commodities sector, particularly SSAB, Holmen and Lundin Mining. We have decreased our exposure in finance, but remain over-weighted in Storebrand, as the largest holding. Engineering is a large sector for the fund, and we see plenty of companies that should be upwardly re-valued. We are more cautious about consumption and have low exposure here. The healthcare sector has shown very strong performance this year, and we are selective in our exposure here towards companies that we believe have more to give. We have increased our exposure in property stocks, but remain underweighted to the sector.
There were steep falls on world stock markets in October, with the market focusing on economic concerns, rising interest rates and trade wars. Swedish small caps weathered this slightly better, but the Carnegie Small Cap Index was still down 5.9 % for the month, while the fund performed weakly and was down 9.2 %. The biggest negative contributor to this decline was the holding in Outotec, after it announced a risk of additional costs in an already-troubled project. The scant information and the magnitude of the project led the market to rapidly up the risk of a share issue, resulting in a steep fall in the share price. We believe these concerns are exaggerated and, at this moment, the stock has recovered. On the upside, there was a positive contribution from the holding in Mycronic, which delivered a strong interim report, and short sellers have continued to close their positions.
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.
