Portfolio manager comments — Q2 2024
Fund performance was positive in Q2 and the fund rose just over 2% in SEK. Market sentiment was significantly affected by expectations of the measures the central banks will be taking to address inflation. The European Central Bank made the first rate cut in the eurozone in June, while the strong economy and persistent inflation in the US has delayed the first rate cut until the autumn. Both central banks are expected to make one or two additional cuts during the year. The US economy remains robust, while the Purchasing Manager’s Index in the eurozone shows growth within the service sector but a slowdown in the manufacturing industry, particularly in Germany and France. Employment remains strong, although uncertainty has increased as a result of the geopolitical risks. The construction sector in Finland remains weak but the home mortgage data is showing a slight rise.
The IT sector was the strongest performing sector in the period, while consumer staples was the weakest. Four portfolio companies issued positive profit warnings, while three issued negative warnings.
The fund added new investments in companies such as Aiforia Technologies, Elisa, Lindex, Orion, Pihlajalinna, Remedy Entertainment and YIT, while holdings in Dovre, Enersense and Oma Säästöpanki were sold.
Bittium, Kemira and Cargotec were the strongest contributors to fund returns, while Metso, Kesko and Kojamo had the most negative impact.
The start of rate cuts from the central banks appear to be supportive for both the economy and the equity market. The situation for consumers in Finland is expected to improve during the year as real incomes increase and interest rates decline. Inflation has already begun to weaken and the profit outlooks for companies are also improving, so we are optimistic about the future.