Monthly report May 2021 - NFF

The NAV rate in May was 102.81, which gives an increase for the month of 0.60 (0.59%). It is a good month, the fund is planning according to plan.
Inflow of SEK 27 million, thank you very much for that. New lending in May was approximately SEK 34 million.

We introduce quarterly liquidity in the redemption fund on 2021-07-01, we retain monthly opportunities for investments.
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 market
It has been a bit shaky on stock exchanges this month and there are probably many explanations. The most important things I see are the market's concerns about inflation, future bond yields, the level of repo rates and highly valued stock markets. Inflation statistics both here at home and in the US came in well above expectations in May and this has given the markets major concern. We had a sharp rise in interest rates on the US 10-year bond that started in September 2020. In practice, this was a doubling of the interest rate, with a sharp fall in prices as a result. The bond market is a good leading indicator regarding inflation expectations and it is a tip to follow these. The central banks have taken a wait-and-see approach to the new inflation statistics and it is generally communicated as temporary. The future will tell.
A clear illustration of how high share prices are, you see in the picture below, which shows the direct return on a broad European stock index and the S&P 500 minus the ten-year interest rate in each country / area. As you can see, the difference has not been this since the beginning of the 2000s, with the exception of the time before the financial crisis, and we know what happened after that.

Månadsrapport maj 2021 - NFF 13
I do not want to act as a doomsday prophet. However, it may be appropriate, as always, to review your portfolio to see what risk you have and whether it rhymes with your risk appetite.

In the picture below, you can see what the fixed income markets have priced in terms of interest rate increases in the next few years. In Sweden, about 50 basis points. One thing that may be a trigger for continued concern is if this changes in increases in repo rate increases. It is as you do not know the actual picture today that governs but what the market expectations are and they can change quickly.
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Does inflation need to be bad for SMEs? No, not if it is under control, it is usually a sign that growth in the economy is going well. Furthermore, the earnings of these companies increase under these conditions and they thus have an easier time managing their debt commitments.

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