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.
February was a turbulent month, to say the least, ending in huge minuses in the wake of the coronavirus and its feared impact on the global economy.
Fund manager comment
February was a turbulent month, to say the least, ending in huge minuses in the wake of the coronavirus and its feared impact on the global economy. The Swedish market fell almost seven percentage points, but this was better than the global markets in general, which fell 8%. The month began with rising share prices, touching new records as the fourth-quarter reports came in somewhat better than expected. The reversal came following confirmation of greater virus spread in Iran and Italy. In the last week of the month, the Swedish stock exchange fell by almost 12%. The weakest performers were consumer durables, energy and basic materials, while IT and finance held up against the stock market as a whole. Catella Sverige Aktiv Hållbarhet fell 0.8 percentage points more than the index, which was mainly due to price movements at the beginning of the month when large falls for the holdings in Mycronic and Sweco were costly, while the lack of shares in EQT and a low proportion in Ericsson also contributed negatively. On the positive side were the holdings in Tomra, Balder and Handelsbanken, which helped the fund's performance.
Our basic position remains that the stock market has reached high levels both in absolute terms and in terms of valuation following last year's steep rise, and that we see an increased risk of large fluctuations in the event of surprises. The coronavirus turned out to be just such a negative shock, and sharp falls in its wake are concerning but not surprising. Right now, there is still great uncertainty about where this will end. We believe that the strategy of investing in sustainable products and business models provides some resilience to cyclical fluctuations. These companies are in no way immune to the slides we have seen this month, but in an environment with structurally slower growth and the potential for a continued negative stock market climate, we believe that companies driven by a sustainability trend have an opportunity to generate returns above their sector averages, making them able to maintain a higher valuation.
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.