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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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We saw a stabilising of the equity markets during May thanks to the slight deceleration in inflation we are now experiencing. As a consequence, the rise in the US 10-year yield has stalled, hovering at around 3%. The reason we mention this is that, right now, inflation and interest rates are the single most important determining factors for stock market performance. During May, our global fund was down 5,01%, falling 3.42 pp short of our benchmark.
Despite the equity markets' performance, the companies in the fund are doing very well. Estée Lauder reported in early May, announcing annual revenue growth of 10%. This robust result shows that we have left the coronavirus pandemic behind us and are starting to buy from stores once more. Another report worth highlighting is that of our tech company Truecaller, which saw revenues of 116% versus the same period last year. Unfortunately, the company has been impacted by some bad press, which has put pressure on the stock from time to time.
Our strongest performers during May were Fortnox, Traton, and Sterling Construction. The weaker contributors were SIKA, S&P Global, and Apple.
Key market events and trends (what has influenced performance most?)
The factor that has affected stock market performance the most during the first half of the year 2022 is Inflation – in other words, price increases for various goods and services. We can split inflation into two parts, based on source. The first is inflation stemming from price increases caused by the pandemic during 2020-21. Shutdowns led companies to review their supply chains and begin to shift production from Asia to Europe and the US. In general, it is more expensive to produce an item in Europe and the US than in Asia, and so prices have risen.
We have also seen freight becoming more expensive and more challenging. The pandemic also made it difficult for workers to move across borders, which created a shortage and drove wages up. The second source of today's inflation came suddenly, prompted by Russia's invasion of Ukraine. Among other things, the war has pushed up the cost of transport owing to price hikes for diesel and oil. Ukraine is a sizeable agricultural commodity supplier, and the Russian blockage of sea freight from Black Sea harbours is driving up prices for agricultural products. One of the largest underlying causes of inflation today is that we are being forced to change where we buy from. We now need to buy products and services from other sources that are 8-10% higher than our previous suppliers.
The rising interest rates spurred by inflation have put pressure on equity valuations. When equity analysts assign higher discount rates in their DCF valuations, stock prices fall, and this is precisely what we have seen in the equity market during the first half of this year. During our research trip to the US in May, we observed that our companies can handle inflation well. Our Champions have pricing power and have begun to raise prices to protect both revenue growth and profit margins.
You can read more (in Swedish) about the company visits we made in our latest trip to Texas
here.
Portfolio changes
We made no changes to the portfolio during May.
The fund's positioning – our market expectations
The latest reporting season has demonstrated just how well all our companies are doing. We are now riding the repositioning that we made during the first quarter. We have a robust and hardy portfolio that can deliver returns to unitholders throughout the rest of the year.
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 high 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 | -5.41% | -16.04% | 44.20% | 118.26% |
| Benchmark | -1.59% | -7.52% | 44.99% | 102.77% |
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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. | 4.7% |
| MASTERCARD INC. SHS-A- | 4.6% |
| ASML HOLDING NV | 4.6% |
| MARTIN MARIETTA MATERIALS INC. | 4.5% |
| S&P GLOBAL SHS | 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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