March was characterized by geopolitical unrest, trade tensions and increased nervousness in the energy markets. Credit spreads increased throughout the month as a reaction to rising oil prices. The increase was greatest for energy-dependent European companies, where the market priced in higher operating costs and weaker margins going forward.
Norges Bank kept its key interest rate unchanged at 4.0% at the interest rate meeting in March. No future interest rate cuts were signaled. The bank emphasized that energy price inflation can flare up inflation, and that the interest rate path can be adjusted further upwards if price inflation does not slow down.
During the month, we generally reduced our investments in energy, banking and finance, and increased our investments in real estate and industry. Real estate and industrials provide us with good predictable cash flows that we value. The fund acquired the global automotive company Stellantis, which produces well-known brands such as Jeep, Alfa Romeo, Dodge, Maserati and more.
Market turmoil does not change what we see in the underlying companies. The fund’s portfolio consists of quality companies on attractive terms. We will continue to focus on quality issuers to optimize risk-adjusted returns. The fund has strong capital discipline and an overall focus on quality to ensure liquidity, price risk correctly and safeguard unitholders’ capital.
At the end of the month, the fund had a current interest rate of 8.45%* and an effective interest rate of 10.66%*.
*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
Øivind Thorstensen & Simen Aarsland Øgreid
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