May was marked by a gradual stabilization in the interest rate markets, despite ongoing geopolitical uncertainty. Norges Bank raised the key policy rate from 4.00% to 4.25% at its monetary policy meeting on May 6, in line with expectations and citing persistently high inflation. Market rates, however, reacted only moderately: Short-term money market rates rose slightly early in the month but leveled off after the rate hike, while longer-term Norwegian rates fell slightly toward the end of May. The overall interest rate trend thus did not put significant pressure on the bond market, and the fund’s short interest rate duration helped limit the impact of interest rate movements.
At the same time, credit markets continued the positive trend from the previous month. Credit spreads narrowed further in May across most segments, supported by increased risk appetite among investors. This tightening boosted bond prices and thus contributed positively to the fund’s performance throughout the month.
Investment activity in the fund was low in May. The investment team was satisfied with the portfolio’s exposure and positioning, and we therefore made no changes to the portfolio’s composition. The fund maintains its low interest rate duration and balanced allocation between fixed- and floating-rate exposure, which provides resilience during a period of persistent uncertainty in the interest rate market.
As of the end of the month, the fund has a current yield of 5.35%* and an effective yield of 5.55%.*
*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
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