Portfolio manager comments — Q2 2025
Fund performance was positive during the second quarter, rising by nearly 15% in SEK—despite a volatile start marked by concerns about tariffs and global trade. As uncertainty eased during the quarter, global equity markets broadly recovered.
Latin American currencies generally weakened against the US dollar, with the exception of the Mexican peso, which remained relatively stable. The Brazilian real depreciated, while Mexico’s central bank was able to begin cutting interest rates due to stable inflation.
Uncertainty surrounding Mexico’s role in the global manufacturing industry has influenced sentiment. However, on “Liberation Day” (April 2), it became clear that the region would be spared from new tariffs. We believe Mexico’s proximity to the US, cost efficiency, and strong industrial base will continue to benefit the country going forward.
The strongest contribution to fund performance came from an overweight in the financial sector, where the microfinance company Gentera stood out with a strong quarterly report, improved credit quality, and solid profitability. The Mexican stock exchange Bolsa Mex, as well as banks Banorte and Brazil’s Itau, also performed well.
Another Brazilian bank, Banco do Brasil, had the most negative impact on absolute returns after a weak quarterly report and increased credit losses in the agricultural sector, as farmers have been pressured by high interest rates and deteriorating end markets.
Two new holdings were added: the residential developer Direcional in Brazil, and Rede d’Or, a leading private healthcare provider. During the quarter, a takeover bid was made for Serena, a leader in renewable energy in Brazil, which led the fund to sell its holding.
In Chile, the year is shaped by election preparations. At the end of June, the left-wing coalition held primaries in which Jeanette Jara from the Communist Party won. Right-wing candidate José Antonio Kast is also receiving growing support in the polls. Overall, this signals increasing support for candidates outside the political center, although it is still too early to draw definitive conclusions.