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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 Investment Grade retreated by 0.83% during March. Since year-end, the NAV per share has subsequently increased by 0.07%. The financial markets and news flow were dominated by the war in Iran during March. Market development was largely driven by the price of oil, which rose sharply. Commodity prices, except for precious metals, and interest rates rose while stocks and corporate bonds came under pressure.
The sharply rising energy prices and concerns that the war in Iran will result in a long-term reduced supply of oil products from the countries around the Persian Gulf resulted in rising inflation expectations, which led to rising interest rates for both short and longer maturities. Stagflation, with falling growth and rising inflation, could be the result of a prolonged conflict. However, long-term interest rates fell back at the end of the month when concerns about growth took overhand.
From the central bank side, unchanged key interest rates were delivered by both the Federal Reserve, the ECB and the Riksbank. Which was in line with market expectations. The comments on the rate decisions emphasize vigilance regarding energy prices and possible spillover effects to the general price development. The market's pricing of policy rates fluctuated rapidly in March, from previously indicating expectations of unchanged or falling policy rates to now expecting increases in both Europe and the US.
The month's results were negatively affected to some extent by rising credit spreads, but the development in the Nordic region was relatively modest compared to the US and the Euro market. Most of the month's negative results are explained by rising market rates, which resulted in negative price development for the fund's fixed-rate bonds.
Company specific news did not significantly affect the result. At the sector level, a small positive contribution was seen from insurance companies, where several bonds were quoted unchanged to slightly higher. In the longer term, non-life insurance companies could benefit from higher interest rates thanks to future higher interest income and lower discounted liabilities. Conversely, real estate companies were negatively affected during the month as they may be disadvantaged by higher interest rates due to increased future financing costs.
During the month, the fund participated in new issues from Akelius Residential, Beijer Ref and Billerud. Essity and AFRY left the portfolio.
