Portfolio manager comments — Q2 2025
Fund performance was positive during the quarter, rising by 1,4% in SEK.
The second quarter began with mounting tensions in the financial markets, triggered by the US introduction of general import tariffs—referred to as Liberation Day on April 2—which sparked strong reactions across global markets. This led to falling government bond yields, widening credit spreads, and broad equity market declines worldwide. Geopolitical tensions also intensified, primarily due to the escalation of the conflict between Israel and Iran.
Central banks responded in different ways. The European Central Bank (ECB), the Riksbank, and Norges Bank initiated cautious rate cuts as inflation began to recede. In contrast, the US Federal Reserve chose to keep rates unchanged, citing a still-strong labor market and uncertain inflation dynamics.
The divergence in central bank policy contributed to increased volatility in the interest rate markets. Credit markets were clearly affected at times, but ended June with a well-functioning primary market and credit spreads that had recovered to levels seen prior to Liberation Day.
The fund was positioned for falling interest rates, which supported returns. In addition, certain individual holdings—such as Italian utility ACEA S.p.A. and Finnish forest industry company Stora Enso—contributed positively. We continue to maintain a slightly longer duration positioning over the summer, as further tariff-related uncertainty may arise.
During the period, the fund invested in its first bond issued under the EU’s new green bond standard, issued by Spanish utility Iberdrola with a focus on renewable energy projects. We also invested in a green bond from Finnish company Metsä Board and participated in new green bond issues from Sydvatten, Norwegian recycling company Tomra, and logistics firm Catena.