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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 (formerly Likviditetsstrategi) advanced by 0.88% during May. Since year-end, the NAV per share has consequently increased by 1.19%. Global financial markets continued to recover in May, with the lack of further negative news on US trade tariffs supporting sentiment. In addition, market participants shifted their focus to expected tax cuts and deregulation in the US, which are expected to be announced shortly, which supported equity markets. However, the currency and bond markets are signalling scepticism towards US economic policy as government bond yields rose further and the dollar depreciated. Moody’s downgraded the US credit rating by one notch, leaving the country without a AAA rating from one of the leading credit rating agencies for the first time in modern times. A steadily rising national debt and an inability to address public deficits were cited as the reasons for the decision.
The Federal Reserve left its key interest rate unchanged during the month, as economic activity had been relatively resilient during the spring. The outlook for both growth and inflation is highly uncertain and the central bank is warning of increased risks for stagflation, a highly unpleasant scenario where inflation rises at the same time as economic activity is pressured.
The Riksbank also left the interest rate unchanged in May, which was in line with market expectations. With increased uncertainty in the world and a somewhat weaker economic outlook, the Riksbank is ready to ease monetary policy further at future meetings if inflation, which is considered to be temporarily elevated, falls back in line with forecasts. The subdued inflation outlook is further being supported by the Swedish krona that is continuing its comeback, during May it was leading the way as the most appreciated currency among the developed economies.
In the recovery seen in the Nordic corporate bond market, the fund performed well with positive performance contributions from more or less all holdings. The largest contributor was Hoist Finance, which reported good performance for the first quarter at the beginning of the month. Last year, companies invested heavily, which is now resulting in both higher revenues and profits. Positive development was also seen for bonds from the logistics company DFDS, whose quarterly report contained some relieving news, including a slight upward adjustment of the forecast for the ferry segment and a prediction of declining leverage.
Real estate companies generally performed well during the month despite quarterly reports that generally revealed a tougher situation with, in most cases, increasing vacancies and relatively weak lettings. However, the financing opportunities for real estate companies are solid and during the month many companies were seen issuing new bonds. Castellum was one of the companies with the best development after the company had its credit rating raised by one notch by Moody's.
During the month, exposure to defensive companies was increased through additional investments in, among others, TDC Net and Securitas. In addition, the fund participated in a new issue from the medical technology company Arjo, which issued five-year bonds for the first time.
