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.
Banks, however, which climbed from low levels early in the month, reported results that fell short of market expectations.
Fund manager comment
We still have a cautious attitude towards the stock market following the strong start to the year. We are keeping a high proportion invested in the health sector against a lower weight in industrials. We reduced the weight of cyclical materials companies like Boliden and SSAB this month, and instead increased our investments in SCA and AstraZeneca and built up the amount of cash. We have made some adjustments in banking through a purchase of SEB and a sale of SHB, but continue to have relatively low exposure to finance overall.
April was another strong month, and the Stockholm exchange crept over its old high-water mark. The upswing was driven by a combination of hopes for a better economy in the second half of the year, an upcoming trade deal between China and the US, and by central banks not upping interest rates. Corporate reports for the first quarter started to roll in and, as always, there was high volatility and sharp movement on the reporting days, but overall the reports were well received. A couple of conclusions and trends could be discerned. Companies that suffered from rising commodities in 2018 are now more easily able to implement compensatory price increases, while the commodity headwind is diminishing. This was especially obvious for Essity and Electrolux, as well as for Husqvarna and Thule that we have positions in. Furthermore, industrial companies' reports were good. Our investments in Sandvik and Volvo did well, and our lack of shares in Assa Abloy favoured the fund's relative performance. Banks, however, which climbed from low levels early in the month, reported results that fell short of market expectations. On the one hand, costs for monitoring and regulatory compliance have increased, and on the other, there has been pressure on mortgage margins and commission income. Overall, this led to falling prices for bank stocks on their reporting dates. The strongest sector during the month was industrials, followed by finance and IT, while the real estate sector and health companies did worst.
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.