Kraft Obligasjon gave a return of -0.40% in March and is up 4.22% over the past 12 months.

Kraft Bond fell 0.40 percent in March, in a month characterized by rising interest rates, higher risk premiums and continued geopolitical turmoil due to the war in the Middle East.

Interest rates rose significantly through March, driven by rising inflation expectations and a marked repricing of central banks’ interest rate paths. The market increasingly priced in that interest rates will remain high for longer than previously thought, and this lifted yield requirements across the fixed income market.

Norges Bank kept its key interest rate unchanged at 4.0% in March, but upgraded its interest rate path and signaled that there may be one to two interest rate increases during 2026. This was in clear contrast to what the market was expecting at the start of the year. Although consumer price inflation fell to 2.7 percent in February and came in lower than expected, core inflation remained at 3.0 percent. The central bank also believes that inflation will be higher in the future, which was also a direct reason for an upward adjustment of the interest rate path. The market seems to agree, as at the end of the month a market expectation of more than two interest rate increases this year was priced in.

The general rise in interest rates was by far the most important driver of the fund’s performance in March, but the fund’s relatively short interest rate duration helped to limit the impact. The portfolio has long been positioned for higher inflation than the market expects, and was therefore well positioned for a rising interest rate environment. Throughout the month, we therefore only made trades that were necessary for the fund’s daily liquidity.

As usual with increased market volatility, credit spreads also increased slightly in March. Within the segments in which Kraft Obligasjon invests, however, the effect of this was significantly less than the impact of the interest rate increase. This has therefore had less impact on the fund’s return during the month. In terms of levels, most segments are around the levels from the beginning of the year, so we are still cautious about increasing credit risk.

At the end of the month, the fund had a current interest rate of 5.31%* and an effective interest rate of 5.45%*.

*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