1 July 2015, Stockholm, Sweden | News
The first half of the year is now behind us, and in the rear-view mirror we can see six months that started with a strong stock market and continuing falls in interest rates. However, clouds loomed at the end of April and since then we have seen a correction on the stock market, while long bond yields have risen sharply from record lows.
Two familiar themes returned: worries about Greece's high debt escalated once again; and the issue of upcoming US interest rate hikes was constantly present in the background.
There are a number of established sayings based around the seasons and market trends, such as the Swedish expression "buy with the herring season and sell with the crayfish season" (Köp till sillen och sälj till kräftorna), or the almost diametrically opposite expression in English, "Sell in May and go away. Come back on St Ledger Day". Both strategies have likely worked at some time or other, resulting in the sayings, and certain periods of the year are quite simply perceived as more volatile and risky, while others are perceived as safer, with a positive trend.
We do not place any significance on this at Catella. Our investment strategies are based on picking individual stocks and bonds according to each portfolio manager's view of the potential and risks of the different investment options. As an advocate of active management there are always opportunities to invest money; irrespective of whether the overall market is considered to be overvalued or undervalued, there are always certain investment options that are more attractive than others. If a portfolio manager is unable to find any companies at all worth buying, then the opportunities to take negative positions (shorting) should be even better.
Catella today offers a product palette with a number of flexible investment mandates. The Catella Hedgefond fund has a long track record of steady returns at relatively low risk. The fund is able to invest for both rises and falls in the stock market, in individual companies, and is able to vary its total exposure according to the market assessment. Similarly, we have fixed-income funds that are able to adopt positions both for rising interest rates and for widening rate spreads, which occur when the market is worried about rising credit risks.
After a stock market upturn that, with some ups and downs, has continued for over six years, and with a bond market that has been supported by falling market rates for even longer, there is of course room for disappointment and turbulence. Central banks are now faced with gigantic forces that can shift both expectations and actual interest rates in an instant. In this kind of environment it is important to have flexibility. An active portfolio manager is never a guarantee of high returns, but at least active management combined with broad investment mandates can create the necessary requirements for managing volatility at all.
The greatest danger may instead lie in being a passive investor, invested in passive management that is only able to generate returns in an environment of falling interest rates and rising equity prices. This kind of environment will, sooner or later, be consigned to history, irrespective of midsummer's herring or August's crayfish.
We would like to thank you for entrusting us with your business!
IMPORTANT INFORMATION
Past performance is no guarantee of future returns. The money invested in a fund can increase and decrease in value and there is no guarantee that you will get back the full amount invested. No consideration is given to inflation.The Catella Credit Opportunity fund is a special fund pursuant to the Swedish Alternative Investment Fund Managers Act (SFS 2013:561) (AIFMA). You can find all the Catella Fonder key investor information and prospectuses at catella.se/fonder.
