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Likviditetsstrategi advanced during July with 0.16 percent. Since year-end, the NAV per share has consequently increased by 1.67 percent. Global markets had another good month in July, although the rapid spread of the covid-19 delta mutation had a negative impact on sentiment at the beginning of the month. In the bond markets, the low-risk segments developed best when government bond yields fell back in both the US and Europe. The US real interest rate was quoted at its lowest level ever in July. Credit spreads widened somewhat, especially in the high-yield segment. Nordic corporate bonds developed relatively better than the rest of Europe, albeit with limited trading and price movements as a result of ongoing summer holidays.
The largest contributor of the month was Samhällsbyggnadsbolaget i Norden. The company reported both rental income and operating surplus about 10 percent higher compared with the previous year, the growth is mainly a result of completed acquisitions. In the report the target for obtaining a credit rating of BBB+ was adjusted to “in the short term", from having previously being set at the first half of 2021.
The consumer credit company 4Finance also made a significant return contribution after announcing that one of the company's two bonds had been refinanced and the term had thus been extended by three years. With the refinancing and previously completed repurchases, the aim is now to refinance the company's other bond (which Likviditetsstrategi is invested in) during the autumn.
During the month, an investment was made in newly issued bonds from Crayon Group, a globally leading consultant in software and digital transformation. Crayon operates in a market that is undergoing structural growth, in recent years the company has reported steadily increasing revenues while margins have improved. The customer base is large and diversified with a very high proportion of repeat customers, which bodes well for continued favourable development in the coming years. In addition, the proportion of commercial papers in the fund increased following investments in a few issuers, this as a move to limit the risk level.
As expected, the US Federal Reserve (Fed) announced an unchanged Fed funds rate in the range of 0.0-2.5 percent, as well as unchanged asset purchase volumes in the market. Chairman Powell continues to express that the US economy has a long way to go to a stable level of inflation and a maximum employment rate. Disturbing news about the Corona virus has come during the month in the United States, with the spread of the Delta mutation. In the last two weeks, the rate of infection has increased by a factor of four on a national level, at the same time as the rate of vaccination has slowed down, c 50 percent of the American population is now fully vaccinated.
During the month, the ECB also expressed concern about the Delta Mutation and warned that the mutation poses a major risk to the euro area's economic recovery. The central bank announced during the month that they will change their inflation target from a maximum of 2 percent to an inflation rate of 2 percent. It may seem like a minor item, but this opens for lower interest rates during a longer period than previously forecasted and for continued monetary stimulus. The central bank expects an inflation level of 1.9 percent in the current year and 1.5 percent in 2022.
The European and Nordic credit markets showed somewhat higher credit spreads during the month in both the high-yield segment and the investment-grade segment. Stibor 3-months was noted at -0.02 percent, which is at a higher level compared to end of June.
Portfolio Manager of Coeli Likviditetsstrategi
Senior Analyst
| Inception Date | 2010-05-01 |
| Management Fee | 0 % |
| Performance Fee | Yes |
| Risk category | 2 of 7 |
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.