During the month of September, several of the Nordic countries lifted the last Covid-19 restrictions that had existed for a long time. Young and old sought out restaurants, bars and clubs to socialize and dance. However, the financial market had a more cautious attitude, with the stock market and credit market declining during the latter part of the month. Credit spreads rose slightly in both Europe and the United States.
A potentially large restructuring in China affected the market for a brief period. Evergrande is a situation in China, where the huge real estate company has major liquidity problems. We believe that this situation will be a mostly local matter, with few connections to Europe and the United States.
However, the problem of global transport and logistics is a situation that will not be solved any time soon. The companies we talk to provide a consistent picture of challenges that affect margins and delayed sales and delivery. However, the global economy remains strong, and most sectors have strong demand.
The fund's development was slightly positive in September, compared with global investment grade, which fell by about 1%, and Barclays global high yield index, which fell by about 0.7%. The fund has focused on shorter maturities with less risk. The market has been doing well for a long time and a certain correction was expected.
The primary issue market in Europe and the US remains strong, which shows that the overall strength of corporate demand contributes to confidence and solid order books for these new issues. The fund had a good month with a positive return and high activity in both the primary and the secondary markets. Several new names were added to the portfolio, such as Diversey and Solenis.
Diversey is a global leader in providing cleaning and hygiene solutions for the institutional, food and beverage market. The company is fully committed to sustainability as a core driver for the organisation. That commitment is organised around three major objectives: to improve the environment, to protect and care for people, and to innovate sustainable solutions.
In the secondary market, we added in Wesco, Picard, Hannon Armstrong, and James Hardie. The fund also sold some in Kronos and Hapaq Lloyd.
Synthetic CDS credit indices widened during the month. The iTraxx Crossover index went from +229 bp at the end of July to +253 bp at the end of Sep.
Portfolio management team:
Philip Lindgren
Portfolio manager
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