Kraft Obligasjon gave a return of 0.46% in April and is up 4.41% over the past 12 months.

After a challenging March, characterized by significant geopolitical turmoil and sharp interest rate hikes, we observed a gradual stabilization in interest rate markets in April. This occurred despite persistent geopolitical uncertainty.

We also saw the same development in credit spreads for Norwegian issuers. These came in slightly in April, across all segments. This is despite investors apparently still showing somewhat reduced risk appetite. This is probably related to the fact that the current geopolitical uncertainty in many ways benefits the Norwegian economy.

Norges Bank has an interest rate meeting in May. The market is uncertain whether there will be an interest rate increase at this interest rate meeting (assessed as 50% likely), but is pricing in with certainty that there will be an interest rate increase before the summer. This is a consequence of higher inflation than expected at the start of the year.

As previously communicated, we positioned ourselves early in the year that inflation could surprise on the upside and that we could then see a rise in interest rates. This has now happened, and the assessment now is when it makes sense to increase the duration again.

In light of this, there was low activity in portfolio management during April. We bought one bond with a somewhat longer duration, but the portfolio continues to maintain a low interest rate duration and balanced exposure between fixed and floating interest rates to maintain robustness in a period of continued uncertainty in the interest rate market.

At the end of the month, the fund had a current interest rate of 5.28%* and an effective interest rate of 5.53%*.

*Forcosts related to management. Will be subject to change from day to day, and is therefore no guarantee of the return in the period for which it is calculated.

Sincerely

Stein Svalestad