Portfolio manager comments — Q2 2024
The first half of Q2 was marked by further strong economic data in the US as well as an improvement to incoming data in Europe. Despite this, the core inflation remained more sluggish than expected in relation to the central banks’ inflation targets. This led to rising global interest rates, including rates in emerging markets.
However, we saw a turnaround during the second half of the quarter when economic data was slightly weaker in the US. This led to the positive contribution of fixed income returns in the quarter, while the strong SEK had a negative impact.
Elections were also held in several countries (South Africa, India and Mexico), which resulted in high volatility in the markets. The Mexican peso declined sharply after the sitting Morena party performed strongly in the election, which created concerns about constitutional changes. The fund was overweight in Mexico prior to the election, which had a negative impact on returns.
The fund increased the overweight in Turkey during the period, which proved to be one of the strongest markets together with South Africa, and contributed positively to returns. We decreased the exposure to both Mexico and Brazil due to political and government fiscal uncertainty, in favor of an increased exposure to South Africa and Turkey. The fund has a neutral duration.