Market activity was strong in the first half of the month but slowed toward the end. Credit spreads in the Nordic high-yield market fell marginally over the course of the month, while European spreads rose slightly.
A more challenging geopolitical climate increases interest rate and inflation risks and underscores the importance of capital discipline and proper risk pricing. The conflict in the Middle East escalated throughout July, and oil prices once again had a significant impact on the market. The price of Brent crude rose from $73 to $91 per barrel during the month.
The market is now moving toward more normal pricing, with price differences between sectors becoming more apparent. This opens up interesting opportunities in those segments of the market that were previously overpriced.
In our management approach, we seek to limit direct exposure to cyclical individual factors, such as the price of oil, and instead prioritize companies that deliver consistent results across business cycles while offering good indirect diversification. The real estate sector remains the fund’s largest exposure and has contributed positively to returns so far this year. The fund’s portfolio activity during the month was primarily characterized by adjustments to existing positions.
Capital discipline and the proper pricing of risk have been, and will continue to be, a key part of our management going forward.
As of the end of the month, the fund has a current yield of 8.36%* and an effective yield of 11.34%.*
*Before costs 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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