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.
Sustainability is the objective of the Catella Sverige Aktiv Hållbarhet fund, which actively seeks to identify companies where sustainability is embedded in the business concept.
Turnover is higher in active management than in traditional equity funds and the fund aims to deliver return that exceeds its benchmark over time. Investments are selected for the fund through a combination of financial and sustainability analysis. The investment process is based on the conviction that there is a connection between a sustainable business model and persistent profitability and growth over the long term, and that this is often underestimated by the market. Having a sustainable business model involves providing products and services that offer solutions to global environment, social and corporate governance challenges. The fund’s choice of companies is also limited by negative criteria, meaning that the fund does not invest in companies that violate any of the ten principles of the UN Global Compact. The fund is also permitted to invest in derivatives as an aspect of the investment strategy.
The capital flows into sustainable products together with companies’ reports that the underlying structural growth in sustainable, environmentally and climate friendly products has continued at a higher pace than in the general economy.
Fund manager comment
The rise in the global equity markets continued during the month and consolidated the levels above zero for the full year to date. In the US the index is now above previous peak levels. A number of continued risks around the pandemic outbreak, the labour market and the general economic outlook on the one hand are balanced by big monetary and fiscal stimulus on the other. In general, the charts are pointing in the right direction and if the feared second wave does not hit, the market will continue to look at the stimulus and continue buying into this market.
There are big differences between winners and losers in the market where sustainability as a theme has performed strongly. The capital flows into sustainable products together with companies' reports that the underlying structural growth in sustainable, environmentally and climate friendly products has continued at a higher pace than in the general economy. Also, companies with digital business models have showed a structural growth above the average. Profit trends that have surprised positively as well as a willingness to pay more for these profits has contributed to the rise. During the month consumer discretionary, industry and IT- sectors have performed the strongest while the interest rate sensitive property sector and the communication sector performed weaker.
Catella Sverige Aktiv Hållbarhet rose 5,21 percent during the month compared to the index benchmark which rose 3,73 percent. The main contributing companies were Tomra, Vestas, Nibe and Kinnevik as well as the non-holding of EQT that all reported during the month. On the other hand, we lost on a relative basis due to holdings in Balder, Securitas and Axfood as well as the non-holding of Investor.
The uncertainty remains high and in the near term there are a number of things that can halt the rise in the markets such as the US elections, a second wave of the pandemic, sharp and unexpected moves in interest rates and/or negative surprises in the macroeconomic numbers. The equity market has shaken off the worry around the economic consequences that we know will remain for a long time and looks more to big stimulus and packages.
We stick to our strategy of investing in sustainable companies with sustainable business models. The sustainability trend is continuously strong and can be further reinforced by what we are going through. These companies are not immune to cyclical swings, but in a world with structurally low growth we believe that sustainability and strong companies have a better opportunity to generate returns than the average sector peer.
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 Sverige Aktiv Hållbarhet offers a concentrated portfolio of carefully selected Swedish shares, which means the potential to obtain better returns than the index. The fund invests with a focus on large and medium-sized businesses.
The fund is permitted to use derivatives and the net asset value of the fund may fluctuate considerably. The fund is intended for investors seeking active management of Swedish equities and with an investment horizon of at least five to seven years.