Monthly report June 2021 - SCF I

The NAV rate for June was 102.58, an increase of 0.50 (0.4898%). It's an ok month.

I thank you for the great attendance at our webinar which we had on 17/6 and which can be seen YouTube.

We still have a large checkout, despite this we can deliver a good month. New lending in June was SEK 20 million.
The inflow to the fund was SEK 55 million, thanks to that.

We continue our work with extra frequent follow-up of our companies with regard to the Corona situation.

The market
Inflation: to rise or not to rise is that the question?
The central banks have repeatedly argued that the rise we are seeing in inflation is now of a one-off nature and is due to base effects.
They are largely right about that, but the most important component is left out and that is inflation expectations. What is most important for monetary policy is not actual inflation, I believe, but inflation expectations. These control all players who value the market. If a producer believes that the price of input goods will rise in the future, he will of course compensate by occurring. If there is a shortage of input goods, the producer of these will raise the price until equilibrium is reached, the same applies to end products.
What we see now is a gradual upgrade of inflation expectations and the Fed in its meeting on 16 June was the first to acknowledge this and also the Fed announced the market for future interest rate hikes in 2023. This was a little more hawkish than the market expected and above all the dollar has strengthened on this . They had also discussed a reduction in their purchases in the bond market, the timetable for which has not been determined at present. In summary, we can state that there is disagreement about the future development of the committee and this is always the case when a new possible scenario is discussed. It will affect the markets until the picture is clear in the future. Here is a statement from Fed Director Jeremy Powell for the congress, taken from the Financial Times on June 22.

"We will not raise interest rates pre-emptively because we think employment is too high [or] because we fear the possible onset of inflation," Powell said during a congressional hearing on Tuesday. "Instead, we will wait for actual evidence of actual inflation or other imbalances."

One factor that could overthrow this scenario with rising prices is a new wave of infection spread by Covid with new shutdowns as a result and renewed declining growth. For God's sake, let's not see this scenario.
Today there is a shortage of everything from sawn timber to semiconductors and even if sawmills are started, it takes time before these are in production and semiconductor production will of course start in more places than today, it also takes time and so on.

To further shed light on a factor that may dampen inflation expectations, this clip below refers to shipping costs that have risen significantly recently. All these factors together make me, as before, worried that the central banks will do too little too late.

(Source Bloomberg)

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 Each fund's sustainability policy is available on the funds' websites.

We can announce that based on today's sustainability requirements for funds, Scandinavian Credit Fund I is to be regarded as a “light green” fund, which is very good. In Sweden, about 30% of all funds have a rating corresponding to light green or better.

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Emma Westerberg

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