Newsletter Equity Funds 31/7 2023
Market development
- The Fed and ECB delivered expected hikes of 25 basis points, but the comments on what to expect were of greater interest. Both central banks managed to balance between “not over yet” and “we’ll see” in their messages about the future.
- Meanwhile, inflation news was mixed. For example, US inflation fell to a 2-year low, but stubborn wage increases are sustaining inflationary pressures.
- China’s economy remained a concern. The latest export figure showed the lowest increase since the outbreak of the pandemic. However, the state promises support in different, albeit vague, ways.
- The reporting period testified to another fine quarter, but the tone ahead was more negative than the market had hoped for.
Simplicity Norden
Development
The fund declined slightly during a sprawling month marked by the reporting season. The development in the banks was positive, as was the fund’s overweight in the sector, which rose during a weak stock market month. Rising net interest income is still driving banks’ profit increases. Compared with the corresponding quarter last year, SEB increased its operating profit by as much as 67% and, together with Swedbank and DNB, was among the fund’s better holdings during the month.
Larger portfolio changes
As during last month, health care compenies were decreased, this time through reduced positions in AstraZeneca and Novo Nordisk.
Returns as of 2023.07.31
- -1,4%
- -0,7%
- 5,0%
- 3,9%
Monthly report
Simplicity Sverige
Development
The fund fell during a sprawling month. Short selling firm Viceroy found a new Swedish bullying target in Hexagon that also declined after the company reported weak operating cash flow. At the same time, the fund’s major banks SEB, Swedbank and Handelsbanken performed strongly as rising net interest income once again drove profitability higher than expected in the latest quarter.
Larger portfolio changes
The position in AstraZeneca was reduced and Sampo was divested. The biggest increase was in SSAB, now with a weight of 1.6%.
Returns as of 2023.07.31
- -1,0%
- -2,0%
- 4,1%
- 6,2%
Monthly report
Simplicity Småbolag Sverige
Development
SSAB, one of the fund’s largest holdings during the year, fell sharply after earnings came in below expectations. At the same time, the company’s outlook was more positive than before. Indutrade was also downgraded in a seemingly large share price reaction to a report that was in line with expectations. However, the fund’s financial shares performed positively. Avanza, Nordnet and Collector reported continued profit increases and rose between 8 and 17%.
Larger portfolio changes
IT-companies were reduced amid divestments of Addnode and Proact IT as well as reduced position in Mycronic. The biggest increase was in Hemnet, a new top 10 holding.
Returns as of 2023.07.31
- -3,4%
- -7,5%
- -10,4%
- -1,9%
Monthly report
Simplicity Småbolag Global
Development
The fund declined during a month with scattered performance among reporting holdings. Norwegian department store chain Europris increased sales but declining margins weighed on the share. Bravida had a similar development at the same time as the outlook for projects linked to new production deteriorated. In the US, however, the opposite situation prevailed, which benefited both Simpson Manufacturing and Emcor Group, both of which were among the fund’s best holdings during the month.
Larger portfolio changes
The weight in Bravida was cut in half to 0.8% and Raito Kogyo was divested. Positions increased in Extreme Networks as well as F.C.C. CO., a Japanese manufacturer of clutches for motorbikes and cars.
Returns as of 2023.07.31
- -0,7%
- 9,9%
- 9,9%
- 10,5%
Monthly report
Simplicity Fastigheter
Development
The fund rose sharply and broadly, with several major gains among the fund’s holdings. Balder rose by 25%. As expected, property revaluations weighed on real estate companies’ earnings, but profit from property management was stable at similar levels as last year, and rental income generally increased. According to Castellum’s CEO, there was no need for further divestments in the near future. A positive signal as the focus in the sector has recently been largely on the loan-to-value ratio.
Larger portfolio changes
Entra, a Norwegian real estate company focused on offices, was a new holding during the month.
Returns as of 2023.07.31
- 11,0%
- -2,9%
- -18,6%
- -7,8%
Monthly report
Simplicity Green Impact
Development
The fund fell during a month with scattered performance among the holdings. Quarterly reports were behind most major movements, including for Kempower, which issued a reverse profit warning and raised its guidance for the full year. The Finnish company produces chargers for electric vehicles. Badger Meter, a producer of measurement and control equipment for flows, beat expectations and rose double digits.
Larger portfolio changes
Agilent Technologies and Gecina were divested while above mentioned Badger Meter and Sims Ltd, an Australian metals recycling company, were bought.
Returns as of 2023.07.31
- -0,9%
- 11,3%
- 10,0%
- 17,1%
Monthly report
Our Equity Funds
Simplicity
Fastigheter
Simplicity Fastigheter invests in listed companies that own, manage, and build various types of real estate in the Nordic region.
Simplicity
Palma
Our first actively managed mixed fund aims to achieve as high a risk-adjusted return as possible.
Simplicity
Green Impact
A global equity fund investing in companies that contribute to a sustainable development. The fund is classified as dark green (Article 9) under the EU Sustainable Finance Disclosure Regulation (SFDR).
Simplicity
Sverige
After several successful years managing Simplicity Norden we launched Simplicity Sverige, which only invests in stocks listed on the Stockholm Stock Exchange.
Simplicity
Småbolag Sverige
Simplicity Småbolag Sverige focuses on Swedish small-cap stocks. An investment fund for those who believe in the power of Swedish innovation and entrepreneurial spirit, which is anything but “Lagom”.
Simplicity
Norden
Simplicity Norden was launched in 2002 when Simplicity was founded. It has since then outperformed its benchmark index and was awarded with the prize as the best nordic equity fund at the Morningstar Fund Awards 2019.
Simplicity
Småbolag Global
Global diversification and higher expected returns for small- to mid cap equities. Simplicity Småbolag Global is our offering to investors seeking investments in small- to mid cap companies globally.