We cannot claim that central banks are afraid of change, but the result remains the same, "stay put for longer". Several analysts argue that the spikes in inflation numbers we have seen lately are transitory, i.e. price increases are temporary, and the spikes are a result of unusual circumstances related to bottlenecks. Whether this holds true remains to be seen. Regardless, the market has, for the time being, taken the path of the transitory view. US Treasury 10-year yields fell during the month from approximately 1.45% to 1.25%. The commodity price increases that we have seen through all of 2021 paused as well during July, and in some instances fell.
Covid-19 infection rates have unfortunately risen again in many countries. The US looks to institute mask guidance again for some indoor activities for the regions with the highest infection rates. The Delta variant of the virus drives infection rates currently around the world. The positive news is that vaccinations do help to a great extent and we see continued focus on vaccinations in most countries. As for the economic impact, we still view economic conditions as favourable. Industries are performing well, and the quarterly reports give positive guidance as well.
The fund Pareto ESG Global Corporate Bond had another solid month with positive returns in all share classes. AUM grew during the month and we were active in the market during the first weeks of July. A weaker activity level in the new issue market came towards end of July. However, the new issue market in global high yield has been very impressive in both the EUR and the USD market during most of July.
We do find that high yield offers attractive value versus investment grade. In the secondary market we increased fund holdings in Belden, Grupo Antolin, Virgin Media, BBVA and Intrum.
Synthetic CDS credit indices traded in a tight range during the month. The iTraxx Crossover index went from +230 bp at the end of June to +235 bp at the end of July.
Portfolio management team:
Philip Lindgren
Portfolio manager
Read our latest monthly reports
Pareto ESG Global Corporate Bond
Pareto Nordic Corporate Bond
Pareto Nordic Cross Credit
Pareto Global
Pareto Aksje Norge
Pareto Nordic Equity
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. This is marketing communication.