“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” (Albert Einstein)
One of the world’s most prominent physicists and scientific minds of the 20th century still influences us today. We need to question and find new and better ways forward that improve the world we live in. An important forum will be COP28, which begins on November 30th in Dubai. We will not give an account of all the challenges or problems that exist. In our role as fund manager, we focus on financing companies that develop, manufacture and improve products and services for possible solutions to the problems we face, while seeking to combine our sustainability focus with superior financial returns.
As for superior returns, we are very happy about the fund’s November return. November 2023 ended with the second-best monthly performance the fund has had since its inception in 2015.
Both the Federal Reserve and the ECB chose to pause the interest rate hiking cycle, which had lasted a long time. Inflation figures are falling globally, and global growth is slowing down after an incredibly strong period in recent years following the Covid-19 pandemic. Long-term interest rates in both the US and Europe fell steadily during the month as the market began to price in interest rate cuts in the second half of 2024. What we and the market are hoping for is a "soft landing" for the global economy.
If we shift our focus from a desirable future to living in the present, quarterly reports continued to arrive during the month. We reiterate our previous message that the actual numbers show an overall clear decline in order intake and sales, with a few exceptions. On the positive side, the supply chain is in much better shape and the semiconductor industry is now in a significantly better position to deliver products on time.
As for the credit market, credit spreads contracted in both the US and Europe. The credit market was very strong throughout the month and issue volumes in both Europe and the US were significantly better than in October.
The fund had a net inflow and participated in several new issues during the month, such as Sealed Air, Huhtamäki and Ericsson. Huhtamäki and Sealed Air are two global companies that complement the fund’s increasing exposure to more sustainable packaging of industrial goods, food and other necessities. Both companies also focus on reducing leverage. Both of these new positions in the fund traded very strongly in secondary trading since the issue date.
In the secondary market, we reduced our position in Nobian.
Yield levels in fixed income are now more attractive than they have been for a very long time.
The strategy going forward remains having a strong focus on companies that contribute with sustainable solutions here and now. The fund is classified as an article 9 fund under the SFDR Disclosure Regulation.
The synthetic CDS credit index tightened. The iTraxx Crossover index went from +451 bp at the end of October to +370 bp at the end of November.
Philip Lindgren
Portfolio manager
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.