June was a turbulent month, but attempting to time reallocations would hardly have helped, writes John Strömgren, manager of the Carnegie Strategy Fund. NCC is a new fund holding.
As you know, we do not actively allocate between asset classes in equities and bonds. This is because we believe it is difficult to achieve additional returns in this way, and it is easy to get it wrong.
We saw big swings in the markets in June, and with hindsight it is easy to see how and when reallocations could have been made. We could have sold all our stocks and bonds the day before the midsummer break, and bought back everything the day after the weekend.
We didn’t do that, and nor did we try. This was just as we promised, and the fund also performed around +/- 0 during the week following the British EU referendum. I am convinced the outcome would have been worse if we had attempted to time the market.
However, the total outcome over the month was negative, at -1,6 percent. Large exposure to the Swedish stock market has been a disadvantage, but the fund is in positive territory so far this year.
NCC is a new equity holding. The company has now distributed its residential real estate company Bonava. We look forward to generous dividends and positive performance by the business on the back of a growing Swedish construction market. We participated in Castellum’s rights issue, but then sold a proportion at a good profit. On the bond side we bought into Scan Global Logistics, Comhem and Klarna. We sold a Comhem bond with short maturity.
In addition to large fluctuations in the stock market, the British vote on EU membership impacted our corporate bonds, with weak performance by those linked to banking in particular. In addition, spreads in the high-yield segment increased. Safer bonds with longer maturities have instead been good to hold.