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This material is marketing communication
Before making any final investment decisions, please read the prospectus, its Annual Report, and the KID of the relevant Sub-Fund here
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The performance of Coeli Global Select was -4.9% for October, falling 1.92 percentage points short of our benchmark index. The reason for the equity market decline during the month was largely that the fixed income market retains its grip on the stock market. Current interest rate levels make bonds a realistic alternative to equities, with the consequence that money flows from equities to fixed income. The high interest rates levels also mean a general global economic slowdown.
The strongest performers among our stocks during the month were Microsoft, United Health Group, and Adobe. The three with the weakest performance were Thermo Fisher, Fortnox, and Lonza.
Q3 reporting season is underway and, with the exception of the reports from Thermo Fisher and Lonza, momentum in our companies with good, with higher revenues and profits. Market reception of Thermo Fisher's report was harsh, as the company cut its guidance. On the other hand, there was better news in Microsoft's report, after the company beat expectations for both revenues and earnings per share. Another good report worth highlighting was from semiconductor producer ASM International, with revenues up 9% y/y, leaving the company expecting improved order intake in the coming quarters. A key contributor to the fund's good development this year has been our Champions' solid business models and fantastic products. These companies can capitalize on their solid positions and pricing power to be profitable even in a tougher economic environment.
We recommend you look at our blog
www.coeli.se/global/bloggen/ where we have written posts about Cadence Design Systems, one of our Champions in the semiconductor industry, among others.
Key market events and trends (what has influenced performance most?)
"Higher for longer" is the financial market's new buzzword, referring to the possibility that central banks may have to maintain key interest rates higher for longer than previously thought to combat inflation. From an equity fund manager's point of view, we believe the "interest rate peak" is near and that there is likely to be only one more hike in December. This view is based on two factors: inflation is actually dropping and indications from the construction and real estate companies. High interest rates mean real estate companies' financing costs have skyrocketed, impacting their profitability. Construction companies' order books have decreased dramatically, forcing them to make staff redundant, contributing to higher unemployment and meaning newbuilds are slowing down. Although the central banks are focusing on combatting inflation, they cannot close their eyes to what is happening to the economy, with lower demand as a result, and consumers with substantially flimsier wallets. All in all, this affects stock market prices, which are thus supported by future expected growth in company profits. When earnings expectations drop, so too do share prices. Expanding profits are a particularly important factor to us, as we know they are one of the largest contributors to rising share prices in the long term.
Portfolio changes
During October, we sold the pharmaceutical contract manufacturer Lonza. The CEO was suddenly fired during September, prompting us to reduce our investment in the company. Following the profit warning in October (misfortunes never come singly), we sold the remainder of our holding as it was clear we had been incorrect in our positive view on the company.
The fund's positioning—our market expectations
As of the end of October, we had 34 holdings in the fund and a solid distribution between Champions and Special Situations. Champions represent 83% of the fund and Special Situations 17%. Based on next year's expected profits, our global fund's P/E is 20x, and we expect profits to grow by almost 16% during 2024. The expected revenue growth for our portfolio in 2024 is 11%, which can be compared with the IMF's forecast of 2.9% global GDP growth for 2024. We believe we have an appealing portfolio that should generate returns for unitholders. We thank you for trusting us to manage your money.
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Coeli Global Select
| Performance in Share Class Currency | Mth | YTD | 3 yrs | Since incep |
| Coeli Global Select - R EUR | -4.90% | 13.70% | 24.22% | 127.98% |
| Benchmark | -2.98% | 8.12% | 33.72% | 105.74% |
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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 | 4 of 7 |
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Top Holdings (%)
| UNITEDHEALTH GROUP INC | 4,6% |
| MASTERCARD INC | 4,5% |
| ADOBE INC | 4,5% |
| MICROSOFT CORP | 4,4% |
| MARTIN MARIETTA MATERIALS INC | 4,2% |
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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 KID 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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