Saving up a buffer for unexpected costs is probably the most important saving of all. Once your buffer is in place you should create a good mix on a slightly longer investment horizon; the one for your longer-term goals and dreams.
But while it is important to put money into a savings account and build up a solid buffer, we Swedes today have more money in bank accounts than ever, and at practically no interest at all. If you want a return on your account, fixed interest is one option, with today’s best rates offering around 0.3-0.7 percent fixed for three years.
The trend towards higher bank savings has been going on for a long time. In 1995 Swedes had SEK 450 billion on deposit, and after the crisis of 2008/2009 we had more than 900 billion. By the end of 2017, we had nearly 1,700 billion in savings accounts, an increase of almost 300 percent. Swedish inflation over the same period was just over 26 percent. We've been really good at putting aside money in accounts as a short-term buffer, perhaps too good.
What could we do with that money to generate a return without taking too much risk? Catella focuses on offering fund investments with different levels of risk and for different needs.
We have a product particularly suited for savings intended as a low-risk buffer, with a horizon of 2-3 years or more – Catella Hedgefond. One of Sweden’s most experienced teams today manages just over SEK 10 billion with the goal of creating a good risk-adjusted return of 3-5 percent per year at a risk level below 3 percent. With a low correlation to traditional assets such as shares and bonds, the fund is a very attractive complement to buffer savings. It has also taken a big step in sustainability and does not invest in companies active in coal production, weapons, commercial gambling, pornography or alcohol. We also demand a high level of ESG compliance when investing in oil producers. It is important to be aware that the managers are permitted to short sell companies with these activities. Quite simply, a sustainable hedge fund!
Talk with your advisor to find the solution best suited to your particular savings and goals.
Do not hesitate to get in touch with us at Catella for more information.
Warm summer greetings from everyone at Catella!