Monthly report February 2021 - NFF

The NAV rate in February was 101.09, which gives an increase for the month of 0.47 (0.467%). We are happy with that. We dip below 0.50 due to the fact that February only has 28 days, which gives about 3.5 points worse return for the month.
Inflow of SEK 30 million, thank you very much for that.
New lending in February was approximately SEK 90 million.
In 2021, we will introduce quarterly liquidity in the redemption fund, and we will retain monthly opportunities for investments. Details about this and when the conditions are updated, I ask to come back with.

We continue our work with extra frequent follow-up of our companies with regard to the Corona situation.
We have our absolute largest exposure to Finnish industrial companies and they are doing well.

The market
Inflation, that's the big question. For those of you who follow us, you have read that I have been warning about inflation since last summer. It can arise from the enormous support that comes partly from fiscal policy and partly from monetary policy. These supports are absolutely right, however, they can have consequences and one that is desirable in a controlled form is inflation. History teaches us that inflation, if it really comes down to it, is rarely controlled. This is what the market has now opened its eyes to and is worried about. The central banks are clear that regardless of whether there is inflation and it pushes above the target, the zero interest rate will remain.
That reasoning can now be seen in the pricing of the 10-year bond in the US, the interest rate has in practice doubled in a few weeks. It is from low levels but still a doubling, it is a very big movement.

Do we need to be afraid that risky assets will take a lot of beating?
In the graph below, you can see the difference between the 10-year interest rate and the two-year interest rate in the US over the past 20 years.

Guldpriset de senaste 2 åren
Source Bloomberg

The slope has been much larger than what we see today, so from that side we do not have to be very worried. However, I am sure that the difference will be greater in a year than it is today. The time of exceptionally low bond yields is behind us. A healthy inflation trend does not have to be bad for risky assets.
What worries me is that many exchanges are at "all time high" or close and credit spreads are running at the bottom. Companies that a year ago could barely issue HY bonds can today do so at interest rates that they could only dream of a couple of years ago. This leads me to the continuation of 2021 may be volatile and we will see sharp throws in the future in many markets.
In comparison with funds that invest in listed high-yield bonds, we are subject to IFRS 9 and only make adjustments to the valuation when it is called for by credit events. This means that from a market risk perspective, the risk in NFF is small, it is the credit risk you should focus on as an investor.

A paradox regarding inflation expectations is that the price of gold has not risen in this environment, is it possible that those who are afraid of inflation have invested in cryptocurrencies instead? Or is inflation a non-issue?
This graph shows the gold price over the past 2 years, instead of going up now, the price has fallen lately while the market has focused on inflation.

10 års räntan och två års räntan i USA de senaste 20 åren
Source Bloomberg

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. 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 fund units in the secondary market may have been converted to a lower price than official NAV.

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Emma Westerberg

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