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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 Small Cap Select was -3.85% during April, falling 2.38 percentage points short of the benchmark index. Both in absolute terms and relative to the index, this was the result of two companies seeing exceedingly negative share price developments on their reporting days. The reactions were a little too excessive, in our view, but such is life during some reporting seasons. The market is on edge at the moment and the slightest hint of a weaker outlook prompts huge share price movements.
If we compare the movements of a global index of large caps and a small cap index, there remains a huge gap in returns between them this year. The large cap index will have seen a clearly better development during the first four months of this year. We hope for an improvement in the small cap asset class in the coming months.
Our strongest performers during April were Lime, Mortgage Advice Bureau, and Staar Surgical. Those with the weakest performance were Incap, Hexatronic, and Qualys.
Lund-based Swedish company Lime released a solid report with turnover up as much as 22% y/y. The company has continued its successful sales efforts in the Nordics and has now also started canvassing customers in two other markets: Germany and the Netherlands.
The Swedish holiday of Valborg (30 April) is now behind us and around half of our companies have already reported. We are looking forward to hearing about the other half and hoping for healthy reports that are rewarded by the equity market.
Key market events and trends (what has influenced performance most?)
Early in May, the Fed made a further increase of 0.25 percentage points in the Fed Funds target rate. We believe this to be the last or penultimate hike from the Fed in this cycle. The same is probably true of a number of other central banks, which are also nearing the end of the cycle. We base our view on the four percentage point decrease in inflation in the US from the peak in June 2022. The latest reading of inflation in the US was in April at around 5%. The other reason we believe the Fed is nearing the peak of its interest rate increases is that several US regional banks have been severely hampered by the rapid rise in the policy rate. Partly, it is their exposure to real estate companies that is being questioned, but also that many banks have not invested their own liquidity funds well. And when their customers have become suspicious, believing the banks could fail, they have pulled out their savings, prompting a bank run. In our digital world, with its possibility of rapid transactions, bank runs can occur exceedingly fast. In the case of Silicon Valley Bank, 75% of its customers’ deposits were withdrawn in just 36 hours. We can only hope that this crisis of credibility in US regional banks blows quickly over so the stock market is not tarnished by these same concerns.
On the positive side of the scale comes the news that China is opening up in earnest and will want to do business across the world again, with Chinese people starting to travel more than ever before. Getting China back in the global supply chains is important for suppressing inflation. Remember that inflation started to rise in 2021 because supply chains collapsed as a consequence of the world closing up during the coronavirus pandemic.
The fall in the market rates is providing support for share valuations and stock prices, meaning we anticipate robust equity markets in the coming years.
Portfolio changes
During the month, we added the Italian consultancy firm Reply, which we had met at Mediabanca’s equity conference in January. The rapidly growing Reply appears appreciated by its customers and reminds us of Swedish consultancy Addtech. Reply is a good addition to our portfolio’s Champions.
The fund’s positioning—our market expectations
We now find ourselves deep in Q1 reporting season, with an equity portfolio offering solid growth, reasonable valuations, and low debt. We work hard to uncover the best, most exciting entrepreneurial companies that can provide good returns to our unitholders over the long term.
News
Don’t forget to sign up for our funds’ newsletters. At the end of each quarter, we provide the full list of the exciting entrepreneurial companies in which Coeli Global Small Cap Select invests.
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Coeli Global Select
| Performance in Share Class Currency | Mth | YTD | 3 yrs | Since incep |
| Coeli Global Select - R EUR | 17,50% | -10.20% | 45.98% | 133.44% |
| Benchmark | 9.98% | -4.65% | 39.47% | 109.07% |
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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 | 2022-03-28 |
| Management Fee | 1.4 % |
| Performance Fee | Yes, 10% |
| Risk category | 4 of 7 |
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Top Holdings (%)
| MEDPACE HOLDINGS INC | 4,1% |
| COMFORT SYSTEMS INC | 3,9% |
| MORTGAGE ADVICE BUREAU | 3,7% |
| QUALYS INC SHS | 3,5% |
| MUNTERS GROUP AB | 3,3% |
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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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