The NAV rate in August was 104.56, which gives an increase for the month of 0.58 (0.5578%). It is a good month, the fund is planning according to plan. I see a NAV of 6.5-7.0% at the end of the year, given the information I have today.
Influence of SEK 51 million, thank you very much for that.
We potentially have a really big pipeline for the autumn, we will see what becomes reality of these prospects.
New lending in August was approximately SEK 0 million, the fund performed well despite increased liquidity in the fund.
August has been characterized by volatility in mainly the stock markets around the world.
On the one hand, it remains low interest rates that provide support, on the other hand, we are concerned about inflation, the delta virus and its progress worldwide.
In the fixed income markets, the difference between worse and better loans has continued to be compressed. Companies that two years ago would be happy to borrow at 8% can now borrow at 5-6% yield.
It also affects us to some extent, with an unchanged security package we can not take the same interest rate as 24 months ago. With that said, we are doing well and I am optimistic about the autumn.
Trend in the Direct Loan market
For those of you who believe in direct loans as an asset class to invest in, you are not alone. The inflow to global direct loan funds, which is admittedly for institutional capital, is increasing exponentially. When bond yields fall, investors are looking for alternatives. Direct loans offer a target return of between 5-8% per year at low volatility.
As an investor, you give up some liquidity but on the other hand get a high risk-adjusted return. The Nordic Factoring Fund is really a good example of this.
One who is optimistic about stocks is Goldman and this can be illustrated by the graph below, with its accompanying text. My analysis of this is that as long as the market sees low bond yields, this will probably provide support for risky assets. As you know, I am worried about future inflation and higher bond yields. I share that concern with, for example, Bill Gross, one of the world's most famous bond investors, who sees the US 10-year interest rate on 2% at the end of the year.
Below you can see how the fund is invested. Even if the picture is a couple of months old, the distribution is the same, so it illustrates the distribution well.
We have introduced quarterly liquidity in the redemption fund on 2021-07-01, we retain monthly opportunities for investments. Redemption must be announced at least 90 days before redemption.
We continue our work with extra frequent follow-up of our companies with regard to the Corona situation.
In 2020, Finserve Nordic, which is the fund's AIF manager, joined the company to the PRI network, Principles for Responsible Investment. The network is independent but supported by the UN and encourages investors to make responsible investments by following the principles developed by the network.
Finserve Nordic believes that the integration of sustainability risks is an important part of the funds' investment processes. Sustainability risks are defined as environmental, social, or corporate governance-related circumstances that could have a significant negative impact on the value of investments.
Social aspects include e.g. human rights, labor rights and equal treatment. Environmental aspects are e.g. the companies' impact on the environment and climate. Corporate governance aspects are e.g. anti-corruption, shareholder rights and business ethics
All funds under Finserve's management follow the responsible investment process that is formalized in Finserve's Policy for Integrating Sustainability Risks. The policy is available on the company's website https: // finserve.se/vikten-information/. Each fund's sustainability policy is available on the funds' websites.
The fund's AUM is smaller than the approved limits of approximately SEK 1.5 billion. This compilation does not come directly from the system without a lot of hand-laying so it will not be included every month. It will be interspersed with the usual compilation.
(the fund uses its opportunity for borrowing, hence the positive and negative allocation figures)
When you make your analysis of the fund, you should mainly look at the credit risk and liquidity risk in the fund. Are you comfortable with the credit risk generated by the fund's holdings? Furthermore, the assets are illiquid and it can take some time to get their investment back if many want to withdraw invested funds at the same time. The fund has a low market risk and has a low correlation with other asset classes.
We emphasize that we are not stressed by non-lending funds, but continue to work based on our models for credit assessment, all to ensure a good diversification of the portfolio in relation to the credit risk we take.
If you need to sell your holdings, do so in the primary market where you get the best price.
If you are in a hurry to sell, the secondary market may be an option. The official NAV price is published on the first banking day each month, what is shown during the month on NGM is not, I do not want to emphasize the official NAV price, as it may have been converted fund units in the secondary market to a different price than official NAV.