Fund performance throughout the year was characterised by low volatility combined with solid returns in the Nordic market, in both absolute and relative terms. The fund ended 2019 with positive returns every month and good market growth.
The fund has experienced strong growth in total assets, almost tripling during the year. Nonetheless, the fund's sector exposure has not changed significantly, and the fund has maintained its profile with broad sector diversification and low exposure to single holdings. Interest rate and credit duration have been maintained at a low level throughout the year and are presently around one year and less than three years, respectively.
Strong market
The fund's current yield was reduced by approximately 1.5 percentage points during 2019. This is a result of a strong market, with credit margins having been reduced by 50-100 basis points, as well as a somewhat more conservative portfolio at the start of 2020 compared with 2019.
After a very quiet first quarter, 2019 became a year of consistently high activity in the primary markets. Total volumes issued in the Nordic market are estimated at close to NOK 110 billion. This is in line with the record years in 2017 and 2018. In addition, issued volumes for Nordic companies in the international credit markets are not included in these figures.
Citywire AAA-rated portfolio team
The portfolio team, consisting of Lead portfolio manager Øyvind Hamre and senior portfolio managers Eric von Koss Torkildsen and Stefan Ericsson, are all AAA-rated by Citywire.
The senior portfolio managers focus on thorough credit analysis for identifying well-run Nordic companies.
In addition, they seek a portfolio that is broadly diversified across sectors, with limited exposure to single holdings, low interest rate sensitivity and good underlying liquidity. This has proven to be a good strategy.
Øyvind Hamre
Lead portfolio manager
Pareto Nordic Corporate Bond A had a return of 6.9% in 2019 and 4.6% on average since inception (10/26/2015) as per 12/31/2019.
Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager's skill, the fund's risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments.