Pension savers should beware
Momentum has been a successful investment strategy this year, especially in May and June. This means securities that have already performed well continue upward irrespective of their valuation. But so-called value companies, which are reasonably priced, are being ignored.
In the international level, it has been noted that the proportion of defensive companies in the big indexes is now the lowest ever, while almost all new investment in equity funds is channelled to index trackers. Pension savers should beware.
Since we prioritise companies with high yields and stable dividends, we often invest in value companies. We are convinced that this will generate the best returns in the long run, but right now it is not an advantage. The fund fell 1.0 percent in June, which means a return so far this year of -0.1 percent.
Worries of a trade war have probably had an adverse impact on cyclical companies. Swedish equities and the Swedish currency have also been relatively weak, which could be explained by the fact that Sweden has a strong dependence on its export industry and therefore on world trade not meeting new barriers. Since the start of the year, the Swedish krona has weakened by around 10 percent against the larger currencies. The Swedish and Nordic fixed income markets, on the other hand, have been stable.
During June, the fund invested in Handelsbanken and Swedbank. Funds have not owned Swedish bank shares to any large extent so far this year, and have instead chosen to invest in bank bonds. This has been the right strategy as bank shares have performed weakly, but this weak performance means that they now seem more attractive than the bonds – compare a dividend yield on the shares of around 6-7 percent against interest rates on bonds of around 3 percent. The fund has thus financed the purchase of bank shares with the sale of bank bonds.
The fund has also invested in a bond issued by Danish Jacob Holm, which manufactures non-woven products used in the hygiene and healthcare sectors. The bond yields a coupon of approximately 4.5 percent.
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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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