Portfolio Manager comment Coeli Nordic Investment Grade August 2024

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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 (new Likviditetsstrategi) advanced by 0.46% during August. Since year-end, the NAV per share has consequently increased by 4.52%. August offered a lot of volatility, especially in the equity markets, which fell sharply as a result of economic turmoil and question marks over valuations in the tech sector. The VIX index, which measures the volatility of the US S&P 500, rose to levels not seen since the pandemic. In the credit markets gyrations were smaller, credit spreads certainly widened but there was never any panic. One explanation is probably that market interest rates fell during the turmoil, which helped to stabilise the credit market. Since the turbulence, the markets for risky assets have recovered while interest rates are more or less unchanged. This means that the markets are now pricing in four reductions in the US until the end of the year and the same number for Sweden.

After several months of inflows into corporate bond funds, the Nordic credit market is currently characterised by a high risk appetite, which is evident not least in the number of new issues in the high-yield segment. With several interest rate cuts now on the table, there are some indications that we may see an economic recovery, which should benefit many cyclical companies and highly leveraged companies.

Bonds from Hoist Finance were the biggest contributors for the second consecutive month. With support from the strong quarterly report, Hoist issued new bonds with a slightly tighter credit spread than its reference curve in the secondary market, which led to higher prices for the company's other outstanding bonds.

Real Estate companies also continued their positive trend, supported by sustained falling expectations about future interest rates. During August, several Swedish real estate companies came to the market with new bonds that were met with sound interest from investors. Among the larger companies, issues from, among others, Balder and Heimstaden Bostad were noted. Castellum was also supported by an updated analysis from Moody's, where the company's outlook was raised to 'positive'. Catena carried out a directed share issue to partially finance a larger acquisition of a fully leased logistics property in Denmark.

Positive impact on the month's results also came from covered bonds, which benefited from falling market interest rates.

During the month, the fund participated in the aforementioned issue from Hoist Finance, further covered bonds from Danish Nykredit were added to the portfolio.

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