Portfolio manager comments — Q2 2024
Fund performance was positive in Q2 and the fund rose 1.3% in SEK. Q2 was relatively volatile with an initial period of rising interest rates that then declined, which resulted in a fixed income performance that was largely sideways. The period was marked by rising geopolitical uncertainty due to Iran’s increased involvement in the conflict between Palestine and Israel. This caused credit spreads to initially widen, while declining interest rates in the wake of clearer signs of a slowdown to inflation in the US and Europe led to a decline in interest rates.
Overall, this resulted in a strong performance, where the fund’s positions with an overweight in 2 years – 5 years’ duration and the longer spread durations contributed significantly. Our overweight in the Nordic bank and financial sector was the strongest contributor, together with positions in government and mortgage futures as well as holdings in covered mortgage bonds.
The fund’s exposure to real estate companies continued to contribute positively, as these companies could issue new bonds with lower credit spreads during the period. Despite our underweight in the real estate sector, we slightly increased our exposure in the quarter due to improved rating outlooks, and we are focusing primarily on issuers with high or very high creditworthiness. In addition, the fund is retaining a position for rising long-term rates but is also positioned for declining shorter-term rates and a longer spread duration. The fund participated in a a number of new issues at attractive levels, such as Sveaskog, Vacse, ICA, Swedish Orphan Biovitrum, Latour, Bonnier, Danske Bank and Klarna Bank.