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Nor did we have to wait long for political entertainment, ranging from impulsive tweets to a formal impeachment inquiry.

And yet:

September turned out to be a pleasant month indeed. Major stock indices ended in positive territory, while the typically more dismal bond market signalled renewed faith through higher long-term interest rates and unchanged or slightly lower spreads.

Similarly, our unitholders have reason to rejoice: All our funds delivered positive returns this month.

Well ... I would surely love to report that they all rose in value. As it happens, that would not be quite true – fake reporting, if you like. For Pareto Obligasjon, the month detracted some 0.2% from net asset values.

Now, Pareto Obligasjon is a uniquely investment grade fund, investing in Norwegian government bonds, municipal bonds and financials. As debtor quality goes, it doesn't get much safer.

All our funds delivered positive returns this month.

Of course, the negative sign this month is due to the rise in interest rates. In general, our other fixed-income funds have all or most of their holdings in floating-rate notes and hence very low interest duration – or, in the case of Pareto Global Corporate Bond, has shortened the duration over the past several months and has a high current yield to maturity. Pareto Obligasjon, on the other hand, has longer-dated bonds with a lot of fixed, more moderate coupons and hence higher interest duration, meaning more exposure to changes in the interest rate level.

The moral of the story

I feel safe in declaring that this is a temporary loss. The risk of these bonds defaulting is very, very low. Funny thing, then, that just this bond is the only one on our menu with a negative sign this month.

Or maybe not. At this point, the moral of the story is probably painfully obvious: If you take them to be indicators of risk, short-term movements can be very misleading indeed.



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.

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