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Portfolio Manager comment Coeli Nordic Corporate Bond Fund R-SEK March 2019

Nordic Corporate Bond Fund (Class R) advanced during March with 0.22 percent. Since year-end, the NAV per share has consequently increased by 1.31 percent. The positive sentiment in the corporate bond market remained during the month with stable credit spreads and spurring activity in the primary market. However, a slight slowdown was noted at the end of the month as a result of increased concern over the slowing business cycle. The market is supported by inflows in funds, both among investment grade and high yield funds. Most new issues in the Nordic high yield market have been well received with strong demand from investors.

The largest contributor of the month was the mobile operator Lebara, which received a capital contribution during the month that will be used to buy back bonds. In addition, the company presented its year-end report, which showed somewhat declining revenue while the underlying operating profit improved as a result of cost savings.

Also, bonds from Ahlsell developed well and the company has been acquired by a private equity fund and therefore the bond loan will be redeemed in April. In addition, good contributions were received from Telia and Dometic, as each company’s bonds recovered in line with the European credit market. Telia, which held a Capital Markets Day during the month, is expected to have weaker operating profits during the first half of 2019 in comparison to the second half of 2018. Even so, Telia maintains its guidance on operational-free cash flow for the full year 2019. In addition, an ambitious goal was announced that the company aims to be carbon neutral, including suppliers, in 2030.

It was primarily the Danish clothing retailer PWT Holding that was found on the negative side. The company’s yearend report showed that operating profit during the fourth quarter improved compared with the corresponding period last year; however, like many other retailers engaged in selling clothes in physical stores the company is struggling with falling sales and pressured margins.

During the month, new investments were made in floating rate notes from Coor Service Management and Norwegian Hexagon Composites. Among the fund’s holdings of bonds from real estate companies, parts of the holding of Sagax were divested in favor of an investment in hybrid notes from Akelius Residential. Akelius has announced that they are aiming for an improved credit rating and have in recent months carried out extensive property sales in order to reduce the loan-to-value ratio.

In March the US Federal Reserve (Fed) once again pointed out that patience prevails regarding future interest rate hikes. Furthermore, the Fed signals that no interest rate hikes are in the cards during 2019. However, it is noted that the US labor market remains strong, but that economic activity has slightly fallen compared to the strong statistics from the fourth quarter of 2018. In addition, the Fed lowered its growth projections for 2019 to 2.1 percent from the previous 2.3 percent.

During the month, the ECB announced that a rate hike will take place no earlier than 2020, this after previously having indicated that a hike could occur after the summer of 2019. At the same time, the ECB announced its intention to reinvest its outstanding asset purchase program, in its entirety, for as long as necessary in order to strengthen liquidity in the market. Starting in September, the ECB will also offer European banks long-term financing in two tranches with the intention of strengthening the conditions in the financial system and promoting a stable transition of monetary policy. The measures should be looked at in the light of that the economy is currently looking weaker, the outlook for both growth and inflation in the eurozone has considerably been revised down to 1.1 percent, from previous 1.6 percent and the inflation forecast to 1.2 percent from earlier 1.6 percent.

Voting on Brexit continues in the UK and it is difficult to keep track of how many times different alternatives has been voted for. The Brits have received a deferred deadline until April 12, thus the risks of a “no deal Brexit” increases. April is expected to be an interesting month since solutions to both the Brexit tragedy and the trade conflict between the US and China are expected.

In Sweden, Statistics Sweden announced the inflation figures for February. CPI inflation was 1.9 percent, against the Riksbank’s forecast which pointed to 2.3 percent. Thus, inflation is still below both the Riksbank’s forecast and its goal. The expected economic slowdown may make it more difficult for the Riksbank to reach the goal and raise questions about the opportunities for interest rate hikes in coming years.

Overall, the Nordic and European credit markets saw unchanged credit spreads during the month, without any major movements. Long-term government bonds continued their positive trend with falling interest rates. An American 10-year bond now yields 2.41 percent, down from 2.75 percent at the beginning of the month. European government bond yields also declined, for example, yields on German 10-year bonds fell to negative territory. Most notably in Sweden was that STIBOR 3 months went above 0 percent for the first time since 2015.

Coeli Nordic Corporate Bond Fund R-SEK

Performance in Share Class Currency1 MthYTD3 yrsSince incep
Coeli Nordic Corporate Bond Fund – R SEK0.22%1.31%12.13%13.55%

Gustav Fransson

Portfolio Manager of Coeli Nordic Corporate Bond Fund

Alexander Larsson Vahlman

Senior Analyst

Fund Overview
Inception Date2014-06-18
Management Fee0.5 %
Performance FeeN/A
Risk category2 of 7
Top Holdings (%)
LANSBK 1.25% 16-20.09.234.7%
WHITE MOUNT FRN 17-22.09.474.0%
NORDEA BANK FRN 18-26.09.283.4%
MARINE HARV FRN 18-12.06.233.0%
DOMETIC GRP 1 3% 18-13.09.233.0%

DISCLAIMER. The information provided here does not constitute professional financial advice. Past performance is not a guarantee of future returns. The price of the investment may go up or down and an investor may not get back the amount originally invested. The key investor information document (KIID) and prospectus are available at www.coeli.se.

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Alexander Larsson Vahlman

Senior Analyst Coeli Likviditetsstrategi & Coeli Nordic Corporate Bond Fund

  • Worked at Coeli since 2018
  • Worked in the finance sector since 2014
  • MSc from Rotterdam School of Management and Bachelor from Mercyhurst University

Alexander Larsson Vahlman is Senior Analyst for the funds Coeli Likviditetstrategi and Coeli Nordic Corporate Bond Fund. Before Coeli, Alexander worked at Danske Bank with business funding and och business analysis.

Portfolio Manager Gustav Fransson

Gustav Fransson

Portfolio Manager Coeli Likviditetsstrategi & Nordic Corporate Bond Fund

  • At Coeli since 2009
  • More than 10 years in the industry

Gustav has more than 10 years’ experience from the financial industry from various roles within asset management and corporate banking. Prior to joining Coeli in 2008 he worked as a real estate finance analyst at Royal Bank of Scotland, Nordic Branch.

Portfolio Manager Henrik Milton

Henrik Milton

Portfolio Manager Global Select

  • At Coeli since 2016
  • More than 17 years in the industry
  • Master of Science in Finance from Lund University

Henrik Milton has extensive experience from analyzing equity and portfolio management. Previously, Henrik has worked as portfolio manager at Capinordic Asset Management responsible for the Global Opportunities fund and the BRICA fund until 2010. Both of the funds were given top ratings (five stars) by Morningstar.

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Andreas Brock, CFA

Portfolio Manager Coeli Global Select

  • At Coeli since 2014
  • More than 10 years in the industry
  • MBA at London Business School, Bachelor degree from Lund University and is a CFA Charter holder

Andreas has long experience of equity research and investments and invested globally during his time with Capital Group in London, but his formative years as an investor dates back to his days with ABB’s M&A department in China. Andreas is a CFA Charterholder.

Portfolio Manager James Bannan

James Bannan

Portfolio Manager Coeli Frontier Markets

  • At Coeli since 2017
  • More than 12 years in the industry
  • Chartered Accountant (CA) from the Institute of Chartered Accountants, Australia

James Bannan has been investing in Frontier Markets for over 10 years, including as co-lead at BankInvest’s global Frontier Markets listed equities funds from May 2011. Prior to that James lived in Ho Chi Minh City, Vietnam for 5 years, working for BankInvest’s Private Equity New Markets funds, which was rated as the best performing fund in Asia with 2006 – 2010 vintage by Prequin, generating returns of over 50%. Before his time in Vietnam, he worked with M&A at KPMG in Sydney and Copenhagen, where he completed several deals in several in Frontier Markets. In 2018 Coeli Frontier Markets was awarded the prestigious Thomson Reuters Lipper Fund Award for best fund in its category.

Portfolio Manager Hans-Henrik Skov

Hans-Henrik Skov

Portfolio Manager Coeli Frontier Markets

  • At Coeli since 2014
  • More than 12 years in the industry
  • Holds a Master of Science in Finance from Copenhagen Business School, graduating as top two of his class

Having managed listed equities in global Frontier Markets since May 2007, Hans-Henrik Skov has one of the longest experiences in this investment universe. He was at BankInvest Asset Management from May 2007 to February 2014, as co-lead on BankInvest’s Frontier Markets listed equities funds. Hans-Henrik previously worked at Barclays Capital and at JP Morgan, both in London. In 2018 Coeli Frontier Markets was awarded the prestigious Thomson Reuters Lipper Fund Award for best fund in its category.

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Namik Immelbäck

Portfolio Manager Coeli Altrua Makro

  • Joined Coeli in 2018
  • 12 years of experience in global macro investing
  • BSc London School of Economics, MSc Bocconi

Namik Immelbäck is portfolio manager of Coeli Altrua Macro and responsible for investment strategy and research. Over the last 12 years Namik has held various roles as economist, investment strategist and trader at well-known global macro hedge funds such as Comac Capital, Tudor and Millennium in London and New York.

Mikael Petersson

Portfolio Manager Coeli Absolute European Equity

  • Joined Coeli in 2018
  • More than 25 years of  experience in finance industry
  • BSc from Lunds University

Mikael Petersson is the responsible portfolio manager for Coeli Absolute European Equity and has many years of experience in portfolio management. Mikael has been an employee for some of the most successful hedgefund coorporations in Europe, such as Lansdowne Partners and Kairos Investment Management in London. He has also started his own business i Zug, where Coeli previously was an investor.

Erik Lundkvist

Portfolio Manager Strategy Funds and Coeli Balanced

  • At Coeli since 2004
  • More than 13 years in the industry
  • Erik holds a M.Sc. in Economics from Örebro University and CEFA from Stockholm School of Economics

Erik is responsible for Coeli Asset Management Solutions products and has 10 years of experience from asset management in roles such as Portfolio Manager, manager selector and economist.