The NAV rate in November was 106.24, which gives an increase for the month of 0.57 (0.5394%). 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.
An inflow of SEK 98 million, thank you very much for that.
New lending in November was small. We are well balanced with inflows and new lending.
I am now asked how inflation affects our credit funds and how a rising interest rate situation affects them.
Assume an inflation rate of 3% and a return of 2% then the value of that investment decreases by 1% at an annual rate in the current monetary value. This is the case with most bond funds that invest in listed corporate bonds. On the other hand, our credit funds, which this year return from 5% to 7%, provide a real increase in capital of 2% to 4% at an annual rate.
Furthermore, in terms of the general interest rate situation.
Our credit funds are subject to IFRS9, which means that they are valued at book value with a hypothetical market valuation that can only be adjusted downwards. We can therefore not write up the value when interest rates fall as funds with listed holdings do. The reverse is true for a general interest rate increase, then we do not need to write down the value of our holdings. It is the quality of the credit that determines the value of the holdings. When interest rates rise, we can reinvest overdue loans and new capital at higher interest rates, which is positive for the fund's return.
I return to the fact that you as investors must first and foremost assess our ability to provide relevant credit assessments and manage the risks that arise from this. You as an investor avoid volatility with market movements and get a very high risk-adjusted return.
We continue our work with extra frequent follow-up of our companies with regard to the Corona situation.
We have seen a messy November for risky assets. This is where our funds are at their best in your portfolios. We deliver a month with a stable return regardless of whether it bounces in all directions and edges in other markets.
My assessment is that the new virus variant was a trigger for something that has been built up over time. Stock markets have risen despite inflation concerns and then only one catalyst was needed to initiate a sale with accompanying turbulence.
Where do we go from here and what do we have to take into account?
· Energy prices
· Monetary policy
· And so on
I do not intend to go through these but just want to give you a hint about what I am looking at among many other things.
I would like to end by thanking you for your trust as an investor in the fund and wish you a Merry Christmas and a Happy New Year.
Below you can see how the fund is invested
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.
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/viktig-information/. Each fund's sustainability policy is available on the funds' websites
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.