In May, Kraft Strategisk rose by 2.7%. However, the fund is still flat so far this year, weighed down by a significant appreciation of the Norwegian krone against the U.S. dollar and the euro.
The month was marked by a strong first-quarter earnings season for companies. Negotiations between the U.S. and Iran regarding possible peaceful solutions in the Middle East also had a positive impact on the markets.
The equity portfolio performed very strongly. At the regional level, Asian stocks and emerging markets rose the most, followed by the U.S. Europe lagged somewhat behind in the strong rally.
At the sector level, there were very significant differences in performance. The technology sector clearly stood out on the upside, driven by strong quarterly results and a positive outlook for companies in the AI infrastructure sector. On the downside, energy and utilities stocks dominated.
The fixed-income portfolio showed little movement in May. For reference, the broad S&P Global Developed Aggregate Ex-Coll Bond Index rose by 0.26 percent. The 10-year U.S. Treasury yield rose from 4.38 to 4.47 percent.
Geopolitical turmoil has dominated the news for quite some time now, and market participants do not seem to be placing too much emphasis on the fact that inflation expectations have risen significantly over the past couple of months. This has also led to a sharp rise in long-term interest rates so far this year. However, the first-quarter earnings season has contributed to continued strong momentum for global equities. Future earnings expectations have risen further, confirming that the earnings trend for the companies we invest in remains very positive. Assuming a resolution to the conflict in the Middle East is reached soon, we believe this positive trend can continue.
Sincerely
Stein Frode Aaseng
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