Performance was positive in the US stock market and the fund rose just over 16% in SEK during Q1, driven by an unexpectedly strong economy, a stable consumer sector and advances within generative AI. Growth in the US economy continues to be surprisingly strong and appears to be avoiding a recession. The US central bank signaled that inflation is under reasonable control and the market is now pricing in a stabilization to interest rates, with rate cuts expected in 2024. The combination of economic growth and expectations for lower interest rates creates a favorable environment for further positive stock market growth during the year.
Fund returns benefited from the strong performance of Nvidia and Broadcom, which focus on the construction of the infrastructure related to the AI phenomenon. Holdings in Eli Lilly also posted strength after good news about their obesity drug. The home furnishing company Williams Sanoma also demonstrated that it is possible to increase margins despite struggles in sales. Lastly, we are pleased to conclude that Core & Main, which is a relatively new holding, contributed strongly to returns during the quarter.
The demand for electric cars remains extremely weak in the US, which has led to concerns about our holding in ATS. This concern may be warranted but has been largely priced in by the market. The holding in Dynatrace, which provides monitoring of cloud services, posted weak performance that was partly unmerited.
The fund sold and purchased a number of companies. The most notable new investments were made in Meta and the industrial company Willscott Mobile Mini, as well as the divestment of the footwear company Nike and the software company Salesforce.