Portfolio manager comments — Q2 2025
Fund performance was positive during the quarter, rising by 2% in SEK.
Relative to its benchmark index*, the fund underperformed, primarily due to the strong risk sentiment in the US credit market. The second quarter began with high uncertainty in financial markets following the US introduction of general import tariffs against virtually the rest of the world. This triggered sharp reactions across global markets, resulting in falling government bond yields, widening credit spreads, broad equity market declines, and significantly higher volatility. Geopolitical tensions also increased, particularly due to the escalation of the conflict between Israel and Iran. We observed diverging central bank actions, with the ECB, Riksbank, and Norges Bank cutting policy rates to stimulate the economy and support weak growth. Meanwhile, the US Federal Reserve chose to keep rates unchanged, as the introduction of tariffs risks pushing inflation higher while the labor market remains strong. Following Liberation Day, the primary market activity slowed considerably, but has since rebounded with high issuance volumes.
The fund remains cautiously positioned in terms of credit risk, particularly in the US credit market, where we believe performance may weaken going forward and where running yields are significantly lower than in other regions. At the same time, risk sentiment in the US credit market has been exceptionally strong, and the fund’s underweight in this segment has been the weakest contributor to performance.
In this environment of geopolitical uncertainty and falling government bond yields, the fund’s exposure to the real estate sector performed well, as the sector has low sensitivity to tariff-related developments. Duration positioning remains neutral. During the month, the fund participated in the issuance of Munters Group AB’s new green bond framework.
*Solactive ISS ESG Screened USD EUR SEK NOK High Yield TR SEK Hedged Index.