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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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Print
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We wish all our unitholders a Happy New investing Year!
Coeli Global Small Cap Select's performance during 2023 was 17.1%, which beat our benchmark index by 4.7 percentage points. The performance of Coeli Global Small Cap Select was 10.3% during December, which was 3.1 percentage points above the benchmark. One factor behind the robust stock market rally during the month was that market interest rates fell owing to decent inflation data and the subsequent expectations of interest rate cuts in 2024. This led to increased interest in shares, particularly those that have had a tough 2023, such as real estate, consumer, and notably small caps.
The best contributors to returns for the month were Catena, Sterling Infrastructure, and Alfen. Those with the weakest performance were Games Workshop, Elmos Semiconductor, and SOITEC.
It was a relatively quiet period for quarterly reports, with the third quarter releases largely out of the way. Exciting news was announced by one of our British holdings, Games Workshop: it has signed a deal with Amazon Content Service to potentially create an adventure series based on one of the company's most popular games, Warhammer.
We were happy to see that, for the second month in a row, the market rewarded well-run small caps as focus shifts from the central banks' interest rates to what companies deliver on their bottom lines.
Key market events and trends (what has influenced performance most?)
During December, the US 10-year bond yield fell from around 4.3% to about 3.9%. The market continued to discount coming interest rate cuts by the Fed, which proved a catalyst for a stock market upswing. The latest inflation reading in the US was around 3.1%, still closing in on the Fed's 2% target. When inflation falls demonstrably, there will be no reason for the Fed to maintain key interest rates at the high 5.5%, and these are likely to be reduced. At the time of writing, the futures market indicates that the Fed Funds Target Rate will be at some 4.5% in August 2024. If the market is right, there will probably be four reductions of 0.25 percentage points during the year's first three quarters.
Lower interest rates will benefit the real economy, aiding a recovery in the real estate market. Lower interest expenses will give us more money in our wallets for car purchases, general consumption, and vacation travel, among others. In an environment with falling interest rates, rate-sensitive stocks will perform.
Portfolio changes
We made no changes to our portfolio during December.
The fund's positioning—our market expectations
Our market belief for late summer and fall 2023 was that inflation would minimize, leading to market interest rates coming down, too. We were right in this forecast, and the market's interest in "risky" rate-sensitive assets, such as real estate, was considerable during November and December. The returns from our real estate stocks during this period were around 28% in Catena and about 24% in Argan. Another rate-sensitive company that has benefited from the relief rally is installation company Instalco, which has risen 31%. We have several Special Situations stocks that have been aided by the lower interest rates and for which we see upside potential as their stocks move from cheap to normal valuation. Among our Champions, increased turnover and profits over time are what push stock prices up. We believe this mix of growth and value cases gives rise to an attractive portfolio that produces appealing returns for unitholders over the long term.
We thank you for entrusting your capital to us and look forward to a thrilling investment year in 2024.
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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 (%)
| NAPCO SECURITY TECHNOLOGI. INC | 4,1% |
| ASBURY AUTOMOTIVE GROUP | 3,4% |
| REPLY | 3,2% |
| AIXTRON | 3,2% |
| EUROGROUP LAMINATION | 3,2% |
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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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