Attractive issue from Kinnevik
February news revolved around the coronavirus and its spread, which accelerated outside China. This, of course, countered the indications that the infection rate was actually slowing down in China.
Concerns about virus’s impact gradually escalated during the month, causing both stock markets and long bond yields to move down sharply. And credit spreads widened. Understandably, other news was overshadowed, but the Riksbank chose to leave policy rates unchanged. Inflation figures came in lower than expected, leading to a fall in the ten-year bond yield, and this was reinforced by the general worries during the rest of the month.
In the early part of the month, the fund participated in issues of five-year bonds from Kinnevik, Industrivärden and Castellum. Exposures were also increased in insurance company Storebrand and real estate company Vacse. Issues came to a halt towards the end of the month as worries escalated about the coronavirus. The fund reduced its exposures in Tele2 and Stockholm Exergi. We sold a bond in Stockholm Exergi that matures next year as its return was no longer judged attractive. Otherwise, no major changes were made.
The fund strives for a balanced exposure that stands up well even in turbulent times, which we are currently experiencing. It remains to be seen how the virus progresses and what impact we will see in its wake. Predictions are naturally difficult, but it will inevitably some effect on the global economy.
Carnegie Investment Grade fell 0.13 percent this month.
Carnegie Investment Grade is a fund focused on Nordic corporate bonds with high credit ratings. We are in a low interest rate environment, which of course poses a challenge, but strong and stable companies that have a sustainability focus are an attractive combination, and we see sound prospects to achieve a good return over time.