October: SCFI advanced - well in line with target returns

The NAV rate for October was 103.33, an increase of 0.49 per month and a standard deviation of 0.91. A perfectly ok month.

We have inflows of SEK 11 million in September, thank you very much for that.

New lending in September was approximately SEK 30 million.

We are well in line with the revised return for 2020 of 3–5% after fees. We are doing very well in comparison with other funds where we are today.

Our pipeline at the turn of the month October / November on new loans is approximately SEK 900 million up to and including Q1 2021. There is beginning to be great demand for new loans from companies. We gratefully accept all investments in the fund and it would be fun if we could make some of these.

We have a continuous dialogue with our borrowers regarding their situation in the Corona Pandemic. We have no exposure to the sectors hardest hit by the shutdowns, such as the hospitality industry and hotels. We'll see what happens in the next few months. It is possible that some of the companies go into a wait and see situation again. Those who can will work full time, what we see now does not last forever even if the media do their best to scare society.

The market

"Sell on the rumors buy on the facts". That was really the theme before, during and after the US election.

The last week of October was the worst for risky assets since March this year. Stock markets went straight down despite good reports and credit spreads on "high yield" bonds fell apart with price declines as a result.

The vote count is in full swing, but there has been a strong positive turnaround for risky assets over the past week. Regardless of who wins, great stimuli will need to be added to the economy. The escalating spread of infection naturally contributes to the uncertainty in the United States and globally. However, it seems that most countries "only" close down activities that make social distancing more difficult. It is good. It is not possible to shut down the economy as in the spring, in the end money has no value and then we get other problems that are much worse. The vaccine tests seem to be going well, so a launch in Q1 seems very likely.

I have been looking at how the stock market has reacted to surprising news lately. Why am I coming back to the stock market? - yes, it affects sentiment in large parts of other asset markets, even though it is far from the largest.

Below you see Affärsvärlden's general index and Citi's surprise index. The relationship between surprising statistics and how the index works is relatively weak over the past 5 years, with two exceptions in particular and one in particular. It was in the spring when everything went out of control. We do not see that today, even though it is a similar case in the index. In my opinion, this depends on the measures that central banks provide and the stimuli that take place and will take place through fiscal policy. So my conclusion from this is that it will be worrying but we will get through this too, a number of experiences richer. In an environment like this, I want to be invested in uncorrelated assets that are not thrown between hope and despair.

Oktober: SCFI avancerade – väl i linje med målavkastning 7
(source Bloomberg)
Below you see the same index but for the USA against the S&P index, it shows a similar pattern as in Sweden.
Oktober: SCFI avancerade – väl i linje med målavkastning 8
(source Bloomberg)

In the graph below, you see the return for the fund since the start, you can see that the fund's total return after fees is up almost 35 percent. We are very pleased with that. This again shows that the fund is a very good investment in a well-diversified portfolio, where the fund acts as an 'airbag when it swings in other investments.

Oktober: SCFI avancerade – väl i linje med målavkastning 9
(source Bloomberg)

Below you see the NAV distribution and main sectors in which the fund has invested:

Oktober: SCFI avancerade – väl i linje med målavkastning 10

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