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This material is marketing communication
Before making any final investment decisions, please read the prospectus, its Annual Report, and the KIID of the relevant Sub-Fund here
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Print
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June proved to be another tough month for the equity markets. More central banks raised interest rates, putting pressure on the stock markets. During the month, our fund decreased in value by 8.79 percent, which was 2.54 percentage points worse than the benchmark. If we look at long-term inflation and interest rate charts, we believe the market is approaching some kind of trough. Another data point that suggests we are closing in on the bottom is that valuations of the main equity indices are relatively attractive. Right now, the S&P 500 is trading at 15x 2023 earnings and the NASDAQ at 20x 2023 earnings. We are heading into an interesting reporting season that we hope will distinguish the good companies (Champions) from the bad.
Those stocks that performed most strongly during June were United Health, Estée Lauder, and Zoetis. On the negative side of the equation were PagSeguro, HCA Healthcare, and ASML.
At the beginning of June, we attended William Blair’s 42nd Annual Growth Stock Conference in Chicago, at which we had many exciting meetings with US companies. In particular, we met S&P Global, a company we hold in the fund, which you can read more about on
our blog (in Swedish).
Key market events and trends (what has influenced performance most?)
In our previous monthly newsletter (for May), we laid out our beliefs on the origins of inflation, about the coronavirus pandemic, and the war between Russia and Ukraine. We now see the equity markets reacting to central banks starting to lift policy rates to curb this high inflation. In Sweden, the Riksbank has recently raised the repo rate by 0.5 percentage points, while the Fed has raised the fed funds target rate by 0.75 percentage points. Those who regularly follow our monthly newsletters and blog will know that when interest rates rise, it is typically negative for equity prices. The central banks will continue to lift rates until they see inflation slowing down. Sometimes this means a recession, which is negative growth in GDP for two consecutive quarters. That we have gone through a recession isn’t necessarily negative for the stock markets, and in fact, the reverse can be true. What the stock markets expect then is that central banks need to cut policy rates (or stop raising them) to stimulate the economy, and this is something the equity markets usually like.
Please read (in Swedish)
our latest blog post on Nvidia to learn more how interest rates affect company valuations.
We are now heading for an exciting reporting season in which we will read the pulse of the companies in our portfolio. Our analysis shows the companies we own largely have robust business models and products seeing extensive demand, which suggests they can thrive even in tough times. Even though there are companies in the stock market currently having a rough time, such as real estate companies, there are others for which all is well. Three examples from our portfolio benefiting from increased travel are Estée Lauder, L’Oréal, and Mastercard. Estée Lauder and L’Oréal sell cosmetics at airports, while Mastercard takes care of payments.
Portfolio changes
During June, we invested in two new companies: MSCI and Atlas Copco. The companies we sold to make room for these two new Champions were Intercontinental Exchange and Carrier. We usually lift the quality of the portfolio after major downturns to ensure a stronger portfolio for our unitholders. In short, our new companies are Atlas Copco, the world-leading compressor manufacturer, and MSCI, which operates in the finance industry, among other things as the provider of our fund's benchmark, MSCI AC World Index. The company is also now focusing on becoming a leader in ESG disclosure for financial market participants.
The fund's positioning – our market expectations
Global Select is now positioned for a reporting season that will favour companies riding secular trends and that have pricing power. We have increased our weightings in our top 15 companies that have the best momentum in their business models and that can earn money despite this period of slower growth and higher than normal inflation.
News
We have started a new global small cap fund, called Coeli Global Small Cap Select. We apply the same investment process to this as we use for Coeli Global Select. Our aim with the small cap fund is to create positive returns for unitholders and to contribute to the sustainable development of our world. You can find more information about our new fund
here.
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Coeli Global Select
| Performance in Share Class Currency | Mth | YTD | 3 yrs | Since incep |
| Coeli Global Select - R EUR | -8.79% | -23.57% | 27.55% | 98.68% |
| Benchmark | -6.25% | -13.31% | 29.82% | 90.09% |
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Andreas Brock, CFA
Portfolio Manager Coeli Global Select
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Henrik Milton
Portfolio Manager Coeli Global Select
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Fund Overview
| Inception Date | 2014-11-28 |
| Management Fee | 1.4 % |
| Performance Fee | Yes, 10% |
| Risk category | 6 of 7 |
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Top Holdings (%)
| MICROSOFT CORP. | 4,8% |
| UNITEDHEALTH GROUP INC | 4,6% |
| MASTERCARD INC. SHS-A- | 4,6% |
| THERMO FISHER SCIENTIFIC INC. | 4,5% |
| MARTIN MARIETTA MATERIALS INC. | 4,5% |
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DISCLAIMER. This is a marketing communication.
Before making any final investment decisions, please refer to the prospectus of Coeli SICAV I, its Annual Report, and the KIID of the relevant Sub-Fund. Relevant information documents are available in English at coeli.com. A summary of investor rights will be available at https://coeli.com/regulatory-information-coeli-asset-management-ab/.
Past performance is not a guarantee of future returns. The price of the investment may go up or down and an investor may not get back the amount originally invested.
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