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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 advanced by 0.43% during October. Since year-end, the NAV per share has thereby increased by 3.23%. The strong sentiment among investors persisted in October with generally good development for risky assets, the development was supported by sustained growth while inflation risks appear to be limited. The quarterly reports have generally met or exceeded market expectations; however, companies releasing worse-than-expected earnings have in many cases been severely punished on the stock market. Government bond yields in both the US and Europe fell slightly during the month. Spreads in the corporate bond market widened slightly at the same time but are still considered low in the longer term.
At the end of October, the US Federal Reserve announced that its most important policy rate would be lowered by 25 basis points to a range of 3.75 – 4.00%. The decision was expected by the market, the accompanying message from Chairman Powell was rather hawkish and further easing before the end of the year is far from a given. The interest rate cut should be seen in light of the fact that US inflation remains around 3% per year, looking ahead inflation is balanced between an expected slowdown in economic activity at the same time as tariffs introduced during the year trickles down to end consumers.
The ECB decided for the third meeting in a row to keep its deposit rate unchanged at 2%. European inflation is reported only slightly above target and with moderate growth expectations in the eurozone, no interest rate changes are expected from Frankfurt in the coming months.
The flash estimate for GDP in Sweden in the third quarter was reported stronger than expected, thereby strengthening the picture that the recovery in the economy is starting to take hold. Household purchasing power has strengthened and implemented interest rate cuts are now starting to have an impact, together with an expansive state budget containing both tax cuts and increased public spending, growth in the Swedish economy is expected to accelerate significantly next year.
The largest contributors in October were insurance companies, led by SiriusPoint, Protector and Gjensidige. All reported satisfactory profitability for the third quarter, the first two also significantly stronger than expected. Banks also developed well with good contributions from, among others, Jyske Bank and Swedbank. Both banks delivered strong quarterly reports with low credit losses and reassuring levels of capital adequacy.
Bonds from real estate companies also performed well. Heimstaden Bostad was supported by S&P raising the outlook for the company's credit rating to stable. Akelius Residential reported continued strong key metrics and good operational development with low vacancies and rent increases.
With continued high activity in the Nordic primary market, new bonds from Volvo AB, TDC Net and Statnett were added to the portfolio. Maturity extensions were implemented in, among others, Sagax and Ellevio. Divestments were made by Skanska and Tele2. Overall, the changes contributed to maintaining the rate of return in the portfolio and increasing the duration slightly.
