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Nordic stock markets experienced a slightly weaker December, with a small decline. Interest rates rose slightly, while credit spreads remained stable overall. The fund fell 0.8 percent. It therefore closed 2017 with a return of 7.0 percent, which is a good result considering the risk level. This is the sixth consecutive year of positive returns.

The H&M and Volvo shares, two of the fund’s more significant holdings, contributed to the losses in December. H&M has continued to present surprisingly weak sales, leading to question marks about the company’s management. We are not aware of any analyst with a buy recommendation at the moment. This in itself could suggest an upturn for the stock. Other factors that point to the share having passed the worst are the strong financial position, big profits and a high dividend yield.

Cevian’s sale of its holding in Chinese Geely led to a downturn for Volvo’s stock. Otherwise the share has performed excellently throughout the year. It is currently tricky to assess what effects the change of ownership could have on the company’s future performance. The business seems to be doing well right now and its Chinese owners appear to be having greater success with Volvo Cars than its previous US and Swedish owners managed, although under different market conditions.

The portfolio remained largely unchanged this month. We upped our stake in NCC, which we believe was punished too hard over the autumn. This was financed with a reduction in Dometic, a stock that ended the year on a high following strong earnings reports and a promising acquisition in the USA.

In all, we believe there is reason to look to 2018 with confidence given that some of the fund’s major holdings have been down-valued too far in 2017. The economy is expected to remain reasonable and interest rates do not look set to take any large upward movements for the time being.