Q1 2024 was the fund’s first full quarter since its launch and resulted in positive returns of approximately 13% in SEK. Although the period offered good returns overall, AI dominated the market and companies associated with the theme posted excess returns in general.
The fund’s investment in TSMC, a market leading producer of semiconductors, as well as in Iron Mountain, a global leader within storage and information management, posted strength in the period. However, this did not balance out the negative impact from the underweight in Nvidia, which almost doubled during the quarter.
The insurance company Palomar and Core & Main, a distributor of water infrastructure, contributed positively to returns. Palomar specializes in offering insurance for earthquakes, which is an area that historically does not have a high level of competition, while also offering customers better protection. Through diversification, the company now offers insurance for damage arising from floods and hurricanes as well as for crops. Damage from these types of events are expected to increase with climate change as will the need for protection. The company reported stronger than expected results during Q1 with positive outlooks. Core & Main distributes solutions and products primarily within water infrastructure and greater demands are being placed on infrastructure as the climate changes. At the moment there are extensive infrastructure projects in the US that support growth in the company. Core & Main also presented a positive report.
The fund added the Mexican company Grupo Rotoplas given the need for water infrastructure in Mexico, and also added the US companies Trane and Carrier, which are both active within heating and ventilation. We did not divest any of the holdings in the portfolio during the period.