Newsletter Equity Funds 30/6 2023
Market development
- Inflation fell in several places, including in the United States where the latest figure stood at 4.0% over 12 months. However, the focus has increasingly begun to be on factors of inflationary pressure, which remained high in Europe and the United States.
- For example, the interest rate hikes do not seem to bite on the US jobs market, which surprised with more new jobs and vacancies than expected.
- Central banks are not satisfied with the development and the Fed, ECB, Riksbank, and others raised key interest rates and signaled that more hikes are to be expected.
- In addition to inflation, the Riksbank also has two problems that want to pull interest rates in different directions; weak development for the krona and a highly leveraged real estate sector.
- China’s economy seems to lose steam. Activity in the country’s manufacturing and services sectors weakened, and both recent export and import figures have both fallen.
- The Wagner Group’s mutiny in Russia was resolved quickly and quietly without major market movements as a result. However, the development can be seen as a success for Ukraine in the war.
Simplicity Norden
Development
Industrials and banks pushed the fund higher during the month. Danske Bank’s new strategy plan and financial targets were liked by both analysts and the market, which traded the stock up by 16%. In addition, the bank is resuming dividends and projects that the targets for 2023 will be beaten. Things are going well for Volvo and DSV, both of which rose after raising target prices during the month, as well as Sandvik, which also rose when major shareholder Industrivärden increased its holding in the share in early June.
Larger portfolio changes
The biggest changes in the portfolio were that the holdings in the healthcare companies SOBI and Orion decreased slightly. However, the changes were small, in total about 1.3 percentage points.
Returns as of 2023.06.30
- 1,5%
- 4,2%
- 10,5%
- 5,4%
Monthly report
Simplicity Sverige
Development
The fund’s return during the month was driven by banks and industrial companies. Analysts at Barclays, among others, were positive about Nordic banks in general and pointed out that concerns about the banks’ real estate exposure are more than priced in, while profitability is impressive. The holdings Swedbank, Nordea, SEB and Handelsbanken rose as a result. The fund’s industrial companies also impressed with increased target prices for Volvo, Sandvik and ABB. H&M rose sharply after the quarterly report showed a clearly lower profit loss than expected, while the company’s high inventories fell.
Larger portfolio changes
In the portfolio, industrial companies continued to grow, with tailwind from a resilient economy. Weight increased slightly in Volvo while Indutrade and Bufab were admitted to 2% and 1% respectively. The purchases were financed by an exit in SOBI.
Returns as of 2023.06.30
- 1,4%
- 1,7%
- 11,1%
- 7,3%
Monthly report
Simplicity Småbolag Sverige
Development
SSAB, which has been one of the fund’s largest holdings throughout the year, continued to perform strongly. The company impresses with low costs that keep up earnings despite low steel prices and investments in environmentally friendly production technology. Mycronic also rose double digits during the month. Demand for the company’s mask writers for semiconductor production remains good and the company received a new order in June.
Larger portfolio changes
SOBI was left entirely in favour of industrial companies Indutrade and Bufab during the month.
Returns as of 2023.06.30
- -1,3%
- -5,3%
- -0,3%
- 1,5%
Monthly report
Simplicity Småbolag Global
Development
The fund performed strongly with several large price increases among the holdings. The shortage of single-family homes is still large in the US and is holding up demand for the fund’s homebuilders despite the high interest rate environment. Meritage Homes, Installed Building Products, UFP Industrials, GMS, Simpson Manufacturing and Taylor Morrison Home rose on the theme. The fund’s Korean clothing manufacturer Youngone rose over 40% as demand for active-lifestyle clothing is surprisingly high. The company manufactures clothing for North Face and Lululemon, among others.
Larger portfolio changes
Two more US banks were exited during the month. The weight of the sector is now about 5.5%, compared to 21.5% at the beginning of the year. Instead, Franklin Electric, a manufacturer of electric motors, and Extreme Networks, active in cloud-based networking solutions for AI and machine learning, were new holdings during the month.
Returns as of 2023.06.30
- 7,4%
- 7,8%
- 21,6%
- 11,3%
Monthly report
Simplicity Fastigheter
Development
Real estate shares recovered during the month. Analysts were more positive about the sector after the recent declines. Balder and Pandox were among the fund’s largest contributors after new buy recommendations. The development in SBB was also positive. The company has changed its CEO and attracted buying interest from, among others, Brookfield and Balder.
Larger portfolio changes
The weight increased slightly in JM and Balder, while the weight decreased slightly in NP3, Corem and Kojamo.
Returns as of 2023.06.30
- 3,6%
- -9,7%
- -12,8%
- -16,9%
Monthly report
Simplicity Green Impact
Development
The fund’s return was high in June, partly due to high US demand for single-family homes. Construction starts increased by as much as 22% in May and are now at the highest level in just over a year. The fund’s holdings TopBuild, Meritage Homes, KB Homes and Installed Building Products rose on the theme. Jabil, a contract manufacturer of everything from packaging to technical equipment, also rose sharply after the company’s full-year guidance was raised in connection with the quarterly report for Q3 exceeding expectations.
Larger portfolio changes
Hella, Valeo and Plastic Omnium, all subcontractors to the automotive industry, were divested. Ansys, an American software developer for efficiency and optimization analysis, was added to the portfolio, as well as Australian company Brambles, one of the world’s most sustainable logistics companies.
Returns as of 2023.06.30
- 7,1%
- 8,4%
- 17,1%
- 18,1%
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.