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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 3.37% during May, which was 2.04 percentage points better than the benchmark index. During the latter half of the month, we saw a strong performance by small caps as an asset class. The early months of the year (Jan-Apr) saw their fair share of volatility in the small cap segment, but we are now seeing better results among smaller companies.
The best performers in May were Modine Manufacturing, Munters, and Sterling Infrastructure. Those with the weakest performance during the month were Hexatronic, Staar Surgical, and Clearfield.
The strongest performer in the fund this month was Modine Manufacturing, which reported excellent figures. Revenues expanded by 18% in the most recent quarter y/y and the operating margin grew by 2.5% to 7%. We expect Modine to lift its operating margin to 10%. Modine supplies various products for refrigeration (HVAC etc) and numbers Google Cloud and Sweden's Nibe among its customers.
I am writing this month's newsletter in the skies on the way to the US, where three-fifths of the Coeli Global research team will be attending two different equity conferences. We are in Chicago and New York to attend these conferences and meet many of our holdings, as well as to seek out exciting new companies for our funds. It is not inconceivable that some new US holdings may be added to the small cap fund as a result of all our meetings. Keep an eye out via our blog and on LinkedIn for exciting commentary from these company meetings.
Key market events and trends (what has influenced performance most?)
We believe we are closing in on the peak in interest rate hikes in the US. At the time of writing, the Fed's policy rate sits at 5.25%. The policy rate has increased significantly over a short period and, looking back at 2022-23, we are likely to describe this as an exceptional period of rapidly rising inflation and high interest rates as a consequence. We believe the Fed's monetary policy is taking hold and inflation is now dropping relatively quickly. Energy prices are also on their way down, helping to dampen inflation. In fact, there is now deflation in energy prices y/y, and in Germany, gas prices are now lower than they were before Russia launched its war of aggression on Ukraine. Bear in mind inflation was partly triggered by a hike in energy prices over a short period in 2022.
During reporting season, we have seen signs from our companies that supply chains are loosening up again, which is a key piece of the puzzle for companies to operate more effectively. When supply chains work, there is no need for companies to tie up capital in inventories, which allows cash flows to be funneled into investments and for other purposes. A company can thus reduce the share of debt financing of investments, which is positive when interest rates are high.
Portfolio changes
We made no changes to the composition of the global small cap fund during the month.
The fund's positioning—our market expectations
We believe the coming 12 months will prove a healthy period for the equity markets, particularly for smaller companies. The small cap segment will benefit from inflation falling to an even lower level and once the central banks start talking about interest rate cuts, these companies will see extra momentum.
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 | 4,0% |
| MODINE MFG CO | 3,9% |
| MUNTERS GROUP AB | 3,9% |
| QUALYS INC | 3,7% |
| DIPLOMA PLC | 3,7% |
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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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