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A pattern reminiscent of the dot-com crash

The fund fell 0.7 percent in May, which means the gain so far this year is 0.9 percent. The fund seeks out investments in companies with businesses we believe we understand, and that have stable cash flows and good yields. We call this philosophy focused value management.

In recent months these kinds of securities have been relatively weak, and a number of strategy reports suggest that such value companies are now valued at historically high discounts to other stocks. We saw similar patterns leading up to the dot-com crash in the early 2000s and the financial crisis of 2008. As always, it is difficult to know when things will turn but we choose to see the historically large discount on value stocks as an opportunity, at least in the long term.

There has been some concern in fixed income markets that can be traced to signals that the European economy has peaked, president Trump’s tariffs, expectations of several interest rate hikes in the United States and the political uncertainty in Italy. Investors have been looking for more secure investments, causing the US dollar to rise.

Credit spreads have also swelled, causing some corporate bonds to lose value. However, the movements are small in comparison with the stock market. We also feel secure with the stability and return potential of the fund’s bond portfolio, which accounts for approximately half of the fund’s assets.

The fund has made only minor reallocations during the month. On the equities side the fund expanded its stakes in ABB, Skanska and Investor and financed this with reduced holdings in Industrivärden and H&M. The bond holding in Akelius Residential was increased and the fund sold bonds in Intrum, Verisure and Roplan. One new bond holding is Nordea Liv & Pension A/S, which offers life and pension products.

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Since 2nd November 2017 Carnegie Strategy Fund is a feeder of Carnegie Strategifond, the master. The fund management is therefore identical. For more specific information regarding the master fund’s holdings, please visit...

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