"The fund rose significantly in the last two months of the year, finishing ahead of its benchmark index after a year of major fluctuations."
We wrote this about Pareto Investment Fund exactly one year ago, but we could almost have written the same this year. Once again, the fund made a formidable recovery at the end of the year.
Pareto Investment Fund had a very strong end to the year and ended in positive territory. In December, the fund managed to almost recoup the loss relative to the index since the bottom in March. – We are pleased with this development, says senior portfolio manager Tore Været.
– But we are the first to admit that the fund has fluctuated more than it should. With the portfolio changes that have been made, the fund has also changed a lot in terms of the companies' financial solvency. On average, our companies have better balance sheets than before, and we expect to get paid when the market corrects next time.
Despite all the challenges in 2020, in the stock market, the year will probably be remembered for how surprisingly strong the markets came back.
– Few if any thought in March that we should see historically high stock prices. Optimism and liquidity driven by record-low interest rates completely overshadowed the economic realities. And, in recent months, the rollout of vaccine programmes globally has underpinned the continued good market development, says Været.
The portfolio management about 2021
Entering 2021, we believe in continued good growth in renewable energy and in our holdings there. We also believe it is right to maintain the overweight in technology and health care. In aquaculture, we are positioned for a recovery after a challenging 2020 with a significant exposure. We expect demand to return, while supply growth will be limited and unlikely to surprise, especially on the upside. When it comes to oil, we have shifted our exposure to producers with good capital discipline and low production costs rather than oil service. But Subsea 7 has been retained – we believe the share can have a big upside in a spin-off of the business towards offshore wind.
Patrick Meum
Lead portfolio manager
Fund updates for December 2020
Pareto Investment Fund A had a return of 12.9% in December 2020 and 7.9% on average for the past 5 years as per 12/31/2020.
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.