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Before making any final investment decisions, please read the prospectus, its Annual Report, and the KID of the relevant Sub-Fund here. Note that the information below describes the share class (R SEK), which is a share class reserved for private investors. Investments in other share classes generally have other conditions regarding, among other things, fees, which affects the share class return. The information below regarding returns therefore differs from the returns in other share classes.
Nordic Corporate Bond Fund (Class R) advanced with 0.32% during October. Since year-end, the NAV per share has consequently increased by 6.32%. During the past month, the market has adjusted to expectations of a Trump victory in the US election. This, together with strength in the economy, has resulted in rising US market interest rates and the ten-year US government bond yield is now higher than it was at the turn of the year. At the time of writing, a couple of days before the election, the opinion polls are very close and should Harris win the election, the market reaction will likely be greater than if Trump would be elected. That said, risky assets such as equities and corporate bonds have shown decent strength regardless of which way the winds of public opinion have blown.
In Europe, and especially in Sweden, the outlook is darker with weaker growth figures and higher unemployment. This means that pressure has increased on the Riksbank to act with larger and faster interest rate cuts.
Credit spreads have narrowed during the year and are now around their historical average. Most likely, we have the strongest development behind us and the scope for much lower credit spreads is limited. At the same time, a portfolio of corporate bonds still provides a decent all in yield and volatility is expected to remain low thanks to expectations of interest rate cuts.
Among the month's biggest positive contributors was Keyto, the holding company behind the service providers Hemfrid and Veterankraft. Keyto continues its acquisition-driven strategy and completed its third acquisition during the month since the bond issuance last summer.
Credit management company Hoist Finance continued to strengthen after the company presented a quarterly report that showed a markedly improved profit as a result of revenues exceeding forecast and good cost control. During the quarter, Hoist increased investments in past-due debt portfolios, competition with other buyers was stated to be relatively low, which provides conditions for maintained good profitability in the coming quarters. Bonds from sector peer B2 Impact also developed well after a positive trading update on developments during the third quarter.
Real estate companies also contributed positively this month with good development for, among others, Heimstaden and Castellum. The reports from the real estate companies indicate overall stable property values, while a slower rental market for commercial premises becomes evident with negative net rentals for several companies.
Activity in the primary market was continuously strong with new issuances from both new and existing issuers. The fund participated in a handful of issues, including investments in the flooring manufacturer Kährs and the camp site operator First Camp.